American motorists find 'buyer's market' at gas pumps
Millions of gallons of gasoline are sitting in refinery storage tanks, tankers, and gas stations across the nation -- and American motorists are indeed in the ''driver's seat.''
For gasoline prices, that is. Some industry analysts predict that it may continue to be a ''buyer's market,'' right through the peak spring and summer driving seasons until the fall.
The world crude oil glut, spurring a series of price cuts, coupled with brimming supplies of gasoline and increased consumer conservation, have pushed gasoline prices steadily down, down, down since last April.
According to the American Automobile Association's (AAA) most recent survey of 6,000 stations, the average price of a gallon of gasoline stood at slightly over $1.39 cents per gallon, down 4.9 cents from last April, two months after the decontrol of domestic crude oil prices. Self-service regular and unleaded gasoline have emerged as the biggest bargains, dropping 6.5 cents a gallon and 5 .7 cents a gallon, respectively, since April.
Boston-area prices have been typical. At one station in Hingham -- typical of the area -- the price for regular gas has fallen from $1.33 in September to $ 1.23 today. Local ''gas wars'' are breaking out here and there around Boston, with one station reported selling at $1.12.
And, as happens when the price for other consumer products goes down, interest in petroleum products goes up. In fact, an increasing number of motorists seeking to take advantage of the comparatively low cost of gasoline are asking local AAA representatives for route and other information for vacations by car, says Melita Hartung of AAA.
When will prices begin to go up again? Maybe not until the third quarter of the year, suggests Larry Goldstein of the Petroleum Industry Research Foundation , an oil industry-funded think tank here in New York. ''Certainly there is an excess supply of crude oil and an excess capacity for refining crude oil,'' he says.
As Mr. Goldstein sees it, an improvement in the economy could indicate that gasoline prices may start to go up again. Some Reagan administration economists look for improvement by this summer. And even now, Goldstein notes -- confirming , to some degree, the AAA's findings - ''there are some indications that gasoline demand is lively -- that it's no longer down. And, obviously, that's going to affect the price. But it's not due to (an overall increase in) economic activity.''
At the same time, some analysts say that the largely downward spiraling prices that have rocked Organization of Petroleum Exporting Countries (OPEC) -- the latest being Iran's reduction by $2 a barrel of its basic crude oil price -- could help to offset any increase in pump prices tied to a general economic upturn. Moreover, these analysts say, Iran's repeated moves to cut its crude prices cannot long be ignored by other OPEC nations competing on the world oil market. A special OPEC session is expected to be held within the next week, some 21/2 months before the previously scheduled OPEC regular meeting was to have taken place in Ecuador on May 20, to see what can be done about solidifying OPEC unity and stablizing oil prices.
While Iran's latest cuts, bringing the price of Iranian crude reportedly down to just over $30 a barrel, have yet to be reflected in the wholesale and retail gasoline market, previous price reductions, coupled with conservation and an overabundant supply picture, have spurred a number of major oil companies to cut wholesale gasoline prices dramatically in recent weeks.
On Feb. 13, exactly one week after Exxon Company, U.S.A., a subsidiary of Exxon Inc., announced wholesale price reductions of 2.2 cents-per-gallon in its Gulf and East Coast markets, it announced a 1.1 cent-a-gallon decrease in the same markets -- for a total of 3.3 cents in a week's time. In California alone, the company's gas price cuts were even greater during this same period. The Shell Oil Company sliced its wholesale gasoline prices from one to two cents-a-gallon around the country in the past week, according to a Shell spokesman.
Whether this latest round of wholesale price reductions will be reflected on the retail level is basically a matter of speculation. But judging from the AAA surveys, as well as statistics compiled by the Department of Energy's Energy Information Administration, there's no denying the general downward trend at the pump since last April. And, as motorists have probably already found out, there are price wars in many localities. According to the Service Station Dealers of America, a service station trade organization, thousands of stations have fallen victim to intense competition and dwindling clientele and have closed down.