Pump prices average $3.33, a weekly survey shows. It’s unclear how long the break will last.

The Los Angeles Times

California’s average gasoline cost dipped over the last week, breaking a 2 1/2 -month string of increases that had fanned public outrage and sent pump prices on a record-busting binge.

The price decrease over the last seven days was tiny — just two-tenths of a penny, to an average of $3.33 for a gallon of self-serve regular, a federal survey showed Monday. Although it marked a welcome reprieve from the double-digit jumps that preceded it, state production figures raise questions about how long the break will last.

Over the last 10 weeks, the statewide average cost of regular gasoline climbed more than 89 cents a gallon, according to the Energy Department’s weekly report. A week ago, California’s average hit a record high of $3.332 a gallon.

Paul Gonzalez, a spokesman for the Automobile Club of Southern California, suggested that retail prices here are following a well-established tendency to “go up like a rocket and come down like a feather.”

“If we’re lucky, we’re out of the days of the rocket, and we’re into the days of the feather,” he said. “I think we’re looking at some stability now… and by the end of May or early June we’ll probably see a decline.”

Conflicting signals, however, continue to plague the U.S. gasoline market.

Although California gasoline prices eased, the nationwide retail average rose
3.8 cents in the government’s weekly survey to $2.947 on Monday for a gallon of self-serve regular. A week ago, the U.S. average fell a penny while California prices shot up 13.1 cents a gallon.

The price of crude oil, which accounts for about half the cost of gasoline, has been switching directions every few days on the New York Mercantile Exchange.

Last week, oil prices rose on wholesale markets because of continuing tensions over Iran’s nuclear program, then fell after an international group lowered its estimates for worldwide demand.

Energy Department figures last week also showed rising U.S. inventories of both gasoline and crude oil amid signs that the sustained increases at the pump could be slowing demand.

On Monday, the price for benchmark light sweet crude plunged $2.63 to $69.41 a barrel for June delivery. Gasoline futures for June delivery dropped 12.45 cents to $2.054 a gallon.

Muddying the picture for California, state figures released Wednesday showed gasoline production at in-state refineries fell in the week ended May 5 and was more than 3% below year-earlier levels.

In addition, inventories for California-grade gasoline were nearly 28% below levels at the same time in 2005.

In a letter to Atty. Gen. Bill Lockyer last week, the Foundation for Taxpayer and Consumer Rights called the data “fresh evidence that California’s oil companies have artificially reduced… supply to drive up gasoline prices.”

California refiners have denied manipulating supplies to increase gasoline costs.

Nonetheless, prices fell Monday on the thinly traded Los Angeles wholesale spot market, where refiners and others buy and sell gasoline for immediate delivery.

Oil Price Information Service, an industry publication that tracks fuel markets, pegged the Los Angeles spot price at $2.52 a gallon Monday — roughly indicating a retail price of $3.12 a gallon after adding taxes and transportation costs. The current retail average for Los Angeles is $3.404 a gallon, according to Monday’s Energy Department survey.

“Retail prices are starting to come down,” said Andre F. van der Valk, who owns four gasoline stations in Southern California. “There’s plentiful product, there are no refinery problems and retailers are being competitive. It’ll go down 2 or 3 cents here and there before Memorial Day,” the traditional start of the summer driving season.