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Retail Gasoline in U.S. Drops as California Prices Begin to Ease

Oct. 16 (Bloomberg) -- Gasoline at U.S. pumps dropped as regulators in California responded to shortages that drove retail prices to a state record earlier this month.

The national average price for regular gasoline declined 3.1 cents to $3.819 a gallon from a week earlier, the U.S. Energy Information Administration said in a report posted on the agency’s website yesterday. The price was $3.476 a year ago, department data show.

Gasoline at pumps in California rose to a record $4.671 a gallon on Oct. 9 because of refinery disruptions and equipment shutdowns, driving the nationwide average to $3.85 last week. Retail prices in the state fell 3.6 cents a gallon this week after state regulators permitted refineries to make gasoline with higher vapor pressure, allowing them to increase production by adding butane to the mix.

“California prices are down and they’re going to continue to drop,” David Hackett, president of independent fuel consultant Stillwater Associates in Irvine, said by telephone yesterday. “Now that we’re solidly in the winter season, refiners can make more gasoline, so the whole refinery component of the equation has been mollified.”

Gasoline prices will track the price of oil, which makes up about two-thirds of the cost of the motor fuel, Hackett said.

Oil for November delivery slipped 1 cent to settle at $91.85 a barrel on the New York Mercantile Exchange yesterday. Nymex gasoline futures also dropped 4.25 cents to $2.8503 a gallon yesterday.

Gasoline Inventories

Motor-gasoline inventories probably climbed by 250,000 barrels to 195.7 million last week, according to a median of eight analyst estimates before an Energy Department report tomorrow. Inventories dropped to 195.4 million barrels in the previous week, the lowest level since October 2008.

Crude supplies probably rose for a second week, gaining 1.5 million barrels to 367.9 million last week, the Bloomberg survey showed.

Retail gasoline fell in every region of the U.S. this week except the Gulf Coast, where prices climbed 0.7 cent to $3.544 a gallon, the Energy Department said.

“You should see lower prices for the next few weeks,” James Williams, president of WTRG Economics, an energy-research firm in London, Arkansas, said by telephone yesterday. “This has been a maintenance period for a lot of refineries, and there have been refineries now coming back online.”

The Energy Department conducts a telephone survey of about 800 retail gasoline outlets across the U.S. each Monday to post weekly gasoline prices as of 8 a.m. local time that day.

To contact the reporter on this story: Lynn Doan in San Francisco at

To contact the editor responsible for this story: Dan Stets at

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