North County gas prices drop quickly

By: Ann Perry - Staff Writer
North County Times June 13, 2007

NORTH COUNTY -- Up like a rocket, down like a feather. That's how gasoline analysts describe how prices at the pump behave -- going up in a sharp spike, then falling ever so gradually over time.

After rising sharply to a record high of $3.45 per gallon of unleaded gas, prices in North County have been declining in an uncharacteristic and unfeatherlike manner in the last few weeks, according to a survey of 202 local gas stations taken for the North County Times on Wednesday. The average price of regular unleaded fell from $3.28 a week ago to $3.21 on Wednesday, or a penny a day.

"We've seen them go up that fast, but not down that fast," said Charles Langley, gas analyst for the nonprofit Utility Consumers' Action Network, which produces the survey. "It's the most significant drop this year."

Whether this is just a temporary lull before prices rebound remains to be seen. Gas prices typically rise in the spring and summer and drop in the fall.

A state official said that the lowering of prices could just be the result of state gasoline production stabilizing after some tumult due to significant refinery outages in the spring.

"We actually had a very early spike," said Susanne Garfield, spokeswoman for the California Energy Commission, a state agency that monitors refinery production. "What we're seeing now are better production levels. It's hard to tell what summer demand is going to be."

Another theory, advocated by Langley and other market watchers, is that California drivers are finally responding to price pressure by buying less gasoline -- thereby pulling prices down.

He pointed to reports by the California Board of Equalization, which tracks excise gas taxes, showing that consumption of gas during the last three quarters of 2006 was down in each quarter, the first such decreases in 14 years. The most recent data available from the board shows that gas consumption rose slightly in January, to 1.3 billion gallons, from January 2006, but fell by 2.5 percent in February, to 1.2 billion gallons, from the previous February.

Anita Gore, board spokeswoman, said: "Historically, as gas prices rise and stay pretty steadily higher, then we see consumption go down. That's because people consolidate trips or use mass transit."

However, she added: "What we have now that we didn't have in the 1970s is hybrid vehicles. As they gain in popularity and people choose those over (vehicles) using more gas, we may see a consistent decline."

Langley said, "There's been this constant drum beat that consumers aren't responding to gas prices." But he said he believes that based on the board's numbers and other sources, that is not the case.

Wednesday's average of $3.21 per gallon is lower than the North County average for the same date in 2006, when the average was $3.42, and in 2005, when the average was $2.34.

The 50 lowest-priced stations averaged $3.11 per gallon. The cheapest was $3.03, cash price, at a Golden State station in Poway.