Gas Prices Finally Drop

But Is It A Trend? Analyst Says It's Too Early To Know

(CBS/AP)  A boost in gasoline production and a dip in oil prices has led to this year's first nationwide drop in gas prices, an industry analyst said.

"All grades combined, gasoline prices fell about 6½ cents to $2.04 a gallon," Lundberg Survey publisher Trilby Lundberg told CBS Radio News. "Self-serve regular also fell about 6½ cents to $2.01."

The survey regularly polls nearly 8,000 gas stations across the United States.

"Supply and demand are better matched now in our gasoline market, and that is why prices are down for the first time since late December," Lundberg said.

Prices had risen more than 59 cents since mid-December. The average price for all grades on the last survey May 21 was slightly above $2.10 per gallon.

"About half of that 6½ cents comes from lower crude oil prices, which are due in part to OPEC's decision to drastically raise production for July," said Lundberg. "The other half comes from our refiners maximizing output to meet our new summer demand."

Crude oil prices, which have been hovering above $40 a barrel in recent weeks, closed last week at $38.45 a barrel, Lundberg said.

She said it was too early to tell whether the price drop was a trend.

"Oil production from OPEC and oil prices are a wild card," she said. "OPEC has already been producing over its quota, now it has raised its official quota, so how much more oil will actually come onto the market isn't known."

OPEC, which supplies more than a third of the world's crude, announced earlier this month it would raise its official daily production quota by more than 2 million barrels to 26 million barrels and, if necessary, by an additional 500,000 barrels on Aug. 1.

The drop at the pump also reflects an effort by refiners to maximize gasoline production to meet summer demands, Lundberg said.

"Domestic refiners did crank up production to 96 percent of their capacity," she said. "They do still have to import some gasoline, and imported volumes of gasoline are harder to come by because of our new recipes from Environmental Protection."

The national weighted average price of a gallon of gasoline at self-serve pumps on Friday, including taxes, was about $2.01 for regular, $2.11 for midgrade and $2.20 for premium.

"Self-serve regular is lowest in Tulsa, where the average is $1.75 a gallon, and highest in San Francisco at $2.32," said Lundberg."