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Cost of gas may be headed downward again

The average price for a gallon of gasoline in the United States rose in the last three weeks but is expected to fall again, an industry analyst said Sunday.
/ Source: Reuters

The average price for a gallon of gasoline in the United States rose in the last three weeks but is expected to fall again, as a decline in the price of crude oil trickles down to the pump, an industry analyst said Sunday.

The national average for self-serve, regular unleaded gas was $2.7722 a gallon on Aug. 13, up 3.86 cents from July 23, according to the nationwide Lundberg survey of about 7,000 gas stations.

This was well below the Aug. 11, 2006, all-time high of $3.03, and 12.80 cents higher than the $2.6442 a year earlier.

Initially trading within a $72 to $80 per-barrel price band, the average price for crude broke out of the range for the second week to trade between $81 and $82.50 per barrel. But last week, those prices settled back to about $75 to $78 per barrel.

But at the pump, prices still reflected crude's price jump and had yet to fully factor in the drop in crude prices last week.

"The difference can be summed up to lag time between the trading price of the raw material and the consumer price of the finished product," survey editor Trilby Lundberg said.

The United States is facing gasoline glut as demand has been seriously hobbled by the weak economy and especially by high unemployment, Lundberg said.

Barring any natural or man-made disaster affecting crude prices, Lundberg expects gas prices to trend down in the near future.

"They're already doing so in some areas in the country," she said. "It's over supplied and under-demanded, and it makes it urgent for refiner competitors, wholesale competitors and retailer competitors to pass through any cuts they can because all three sectors are hungry for sales."

In the latest survey, San Francisco had the highest average price for self-serve, regular unleaded gas at $3.21 per gallon, while the lowest price was $2.54 a gallon in Jackson, Mississippi.