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Today, gas prices fell to $2.91 a gallon, the lowest price since March 6, 2007. In what can only be described as a "major move" by the oil industry, San Diego gas prices have fallen 7¢ since last Friday, and 6¢ in the last 72 hours.

According to Charles Langley, Gasoline Project manager at UCAN, the Utility Consumers' Action Network, the low prices are prompted out of political necessity rather than market conditions.

"The oil industry is cutting its retail profit margins to keep prices low through the August recess in Washington DC." says Langley.

At issue is the ratio of the cost of oil to the retail price charged for gasoline. For example, on May 9, 2007, gas in San Diego cost $3.50 a gallon. At that time, the cost of the oil in a gallon of gas represented 42% of the retail price. Today, the cost of the oil in a gallon of gasoline accounts for 60% of the retail price. 

The industry claims that the price of gas is intimately connected tied to the cost of oil. If that's true,  San Diego
should currently be paying anywhere from $3.60 to $3.80 a gallon.

"If there really was a law of supply and demand," says Langley, "somebody should be going to jail for breaking it. It is obvious that refineries are cutting their margins to keep prices low."

UCAN has long asserted that there is a "Heat to Price" effect on the cost of gasoline: "In ten years of watching gas prices, we've noticed that the higher the political heat, the lower the price of fuel. Last Saturday, the Congress approved new energy legislation that isn't friendly to the oil industry." (House Resolution 969 read text)

In fact, Nancy Pelosi said that passing the new legislation was the Democrat's top priority.  Now, the bill moves to the Senate for approval. Politically, high gas prices are a poison pill for any politician, and the oil industry knows this. As a result, the major oil companies are taking lower profits on the refining end in hopes of keeping a low profile throughout the upcoming vote in the Senate.

Our prediction? Gas prices will remain relatively stable and comparatively "affordable." through August and September, depending on what happens with the energy bill. Oil profits will remain high, but they will be less obscene than the reports from earlier this year.

Related stories ...

Fox News interview with UCAN's Charles Langley, August 10, 2007.

UCAN's commentary from November 10, 2006 - Read how the oil industry deliberately drove prices down until election day, and then immediately started raising prices the morning of November 8th.

Radio Interview, KCRW, : The price of oil is going up, why not gasoline?

Commentary: July 31, 2007: Oil prices up, gas prices down.

Commentary, July 3, 2007: Heat to price driving gas prices down.

Looking for cheaper fuel? Click here to visit our cheap gas locator.