Gas prices fall, but experts warn of surge

Eight days before the start of the Memorial Day weekend and the summer driving season, gasoline prices are slowly falling, but at least one expert thinks motorists are in for another surge around the Fourth of July based on anticipated demand.

The average for regular gasoline on Long Island slipped by 3.3 cents in the week that ended Wednesday, to $4.242 a gallon, according to the AAA. That still was 16.7 cents higher than a month earlier and more than $1.12 higher than a year earlier.

Prices had been steadily rising since the recent low of $2.829 a gallon on Sept. 7. The average peaked on Long Island May 12 at $4.284 -- 6.2 cents shy of the record of $4.346 set in July 2008, the AAA said.

Editor Stephen Schork of the industry newsletter The Schork Report, published in Villanova, Pa., said, "While it's possible we've seen the worst for this summer, we will likely be paying our highest prices around the Fourth of July."

The website LongIsland gasprices.com, which is based on motorists' reports, listed a few stations with regular prices just below $4 Wednesday.

Industry experts say that, barring another surge in crude oil prices, pump prices will likely keep sliding in coming weeks. Peter Beutel, president of energy consultant firm Cameron Hanover Inc. in Connecticut, noted that gasoline futures have dropped by 15 percent since April 29, but he says he expects retail prices to fall slowly until after Memorial Day. "It goes down more slowly than it goes up, but that's probably true of everything on the planet," he said.

Crude oil prices have hovered around $100 a barrel in recent days, about $14 lower than their recent peak on April 29.

Kevin Beyer, president of the Long Island Gasoline Retailers Association, contends, however, that retailers often swallow a portion of wholesale price increases during a run-up because competition prevents them from raising pump prices by a like amount. "Because it hurts so much going up," he said, "consumers perceive it as being quicker."

Gasoline demand over the past four weeks was about 1 percent lower than a year earlier, according to MasterCard Advisor's weekly SpendingPulse report.

The U.S. Department of Energy said Wednesday that U.S. refineries increased production by 1.5 percentage points last week from the week before, to 83.2 percent of capacity. That was still 4.7 points below a year earlier, and earlier this week five Democratic U.S. senators asked the Federal Trade Commission to investigate whether refiners were intentionally undersupplying the market to support prices.

Wednesday, Charles Drevna, president of the National Petrochemical and Refiners Association, called the request "ludicrous," adding, "The market is working. There are no gas lines out there. There is plenty of supply."

With Bloomberg