Drivers get break at pump

Oil prices have been surging, but so far drivers are being spared the brunt of it.

At the pumps, gas averaged $2.07 a gallon as recently as May 24, according to the Department of Energy’s Energy Information Agency. At the time, oil was trading for around $42 a barrel.

Now, with crude-oil prices threatening to reach $50, gas prices have stabilized or even come down in many states. The average price per gallon for regular unleaded fuel is now $1.88, though prices vary widely around the country.

Californians pay an average of $2.09 a gallon for regular fuel, according to an American Automobile Association survey. That would be a bargain for Hawaiians, who pay $2.35 for that same gallon. Meanwhile, residents of Oklahoma and Georgia shell out an average of only $1.75 for a gallon of regular.

Unfortunately for Hummer enthusiasts and resolute non-car-poolers, this situation isn’t likely to last. What has been keeping prices low is that the summer crunch for gas wasn’t as severe as expected because Americans appear to have driven less. After growing by an astounding 3 percent for the first four months of the year, demand has declined to normal levels. That also helped keep gasoline inventories healthy.

The trouble is that even with this cushion, growing world consumption of oil and tight supplies are likely to keep the price of gasoline high for the months to come. Analysts say higher costs will be passed along to consumers in the coming weeks and see the average price of gas surging above $2 again.

“These issues are not going to go away,” says Dave Costello, an economist with Energy Information Administration, which forecasts that crude oil will sell for close to $40 a barrel through 2005. Oil prices make up about half the cost of every gallon of gas, so high costs eventually get passed along to consumers. Indeed, prices for gasoline on the Gulf Coast spot market shot up 16 percent last Friday from a week earlier, a sign that retail prices won’t be long behind.

The variations in gas prices around the country result from differences in regulations and in market forces. California, for instance, is one of the nation’s tightest gasoline markets, lacking the same access to Gulf Coast refineries that help keep prices steadier in other parts of the nation.