A key wholesale gasoline price had its biggest drop this week in four years, indicating relief for drivers at the pump may be coming, an industry analyst said Friday.
The Los Angeles-based Lundberg Survey found national prices of unbranded rack gasoline sold to independent dealers, considered the most sensitive to crude oil price changes, fell 10 cents to 12 cents for the week ended Friday."We don't believe there has been any drop of this magnitude since 1986," Trilby Lundberg, director of the survey, said in a telephone interview.
"This drop is even more dramatic considering the prices include the 5 percent federal tax increase effective Dec. 1," she said.
Lundberg said the unleaded regular grade of unbranded gasoline fell 10.2 cents to 77.5 cents a gallon.
The unbranded prices have been falling since five weeks ago, when unbranded regular unleaded averaged 96.09 cents a gallon nationally.
It had previously peaked at $1.01 a gallon in late September following the runup in crude oil prices after Iraq's Aug. 2 invasion of Kuwait and the U.N. embargo on Iraqi and Kuwaiti exports tightened oil supplies.
Lundberg said it was hard to say how soon drivers might see a drop in retail gasoline prices at the pump, but the fall in the key wholesale unbranded prices indicates that it's coming.
The Lundberg Survey will issue its poll of retail gasoline prices for the past two weeks on Sunday.
The wholesale price of gasolines sold to "branded" stations such as Exxon, Texaco, Amoco, etc. "don't react as quickly to drops in crude oil prices," Lundberg said.
Depending on the grade and buyer, she said the wholesale price of branded gasolines fell 2 to 8 cents over the past week.
The standard-setting West Texas Intermediate crude ended Friday on the New York Mercantile Exchange at $26.58 a barrel, a drop of $6.70, or 20 percent, over the last seven trading sessions. Each barrel equals 42 gallons.
Crude prices really started to plunge last Friday when President Bush said he would send Secretary of State James Baker to talk to Iraqi President Saddam Hussein and raised market hopes of peace in the Middle East.