updated 6/29/2004 8:19:36 AM ET 2004-06-29T12:19:36

Motorists are getting the cheapest gasoline in nearly two months, but it's still at a national average of just over $1.92 a gallon, the Energy Department reported Monday.

The government survey said the average price nationwide of regular-grade gasoline dropped an additional 1.6 cents a gallon last week, the fifth week of price decline at the pump. Prices peaked at $2.06 a gallon during the week ending May 22.

The latest price survey reflected the cheapest gas since the last week of April when the price averaged just over $1.84 a gallon, according to the weekly survey by the DOE's Energy Information Administration. But motorists are still paying on average 43 cents a gallon more than at the same time a year ago.

While gasoline prices may continue to soften in the coming weeks, the EIA cautioned that gasoline inventories remain below average even as refineries are producing at near maximum capacity.

"The system will find it difficult to quickly respond to any surges in demand or reductions in supply" should refinery problems or pipeline disruptions develop, said the agency.

The continuing price drop was spread across the country with declines in every region except the Midwest where the average price last week increased by three-tenths of a penny to $1.817 a gallon.

Prices were still over $2 a gallon on average on the West Coast and in New England, although these regions had declines that exceeded the national average. Motorists were paying on average nearly $2.24 a gallon in California and just over $2.01 a gallon in New England, according to the EIA.

A private survey also showed declining gasoline prices.

The semimonthly Lundberg survey reported a 6.6 cent a gallon drop in all grades of gasoline over the last two weeks. Its weighted average price for all three grades fell to $1.97 a gallon after increasing more than 59 cents between mid-December and June.

The price of self-serve regular averaged $1.94 a gallon, according to the Lundberg survey released on Sunday.

Lundberg and the EIA surveys generally produce slightly different numbers because of differences in they way the surveys are conducted and the time frame covered.

A recent decline in crude oil prices was among the factors cited for the drop in gasoline prices. And crude became even cheaper as this week began.

The price of light crude for August delivery sank to a two-month low Monday on the New York Mercantile Exchange to just over $36 a barrel as concerns eased over supply disruptions because of the transfer of political power in Iraq. Crude had been as high as $42.33 a barrel in early June.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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