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Prices fall during august gop convention Original Source Link: (May no longer be active)
http://www.usatoday.com/money/industries/energy/2004-08-30-oil_x.htmhttp://www.usatoday.com/money/industries/energy/2004-08-30-oil_x.htm
Weekend drivers won't pay as much at the pump
By Barbara Hagenbaugh, USA TODAY
WASHINGTON — Gasoline prices fell Monday to their lowest level in nearly four months, good news for drivers planning to take one last summer trip this Labor Day weekend.
The gasoline price decline reported by the Energy Department came as oil prices trading in New York fell to their lowest level in nearly five weeks.
The drop in oil prices came despite reports of sabotage in Iraqi oil fields. Analysts cautioned, however, against expecting a huge plunge in oil costs as the alignment of supply and demand remains tight.
The average price of a gallon of regular gasoline was $1.87 Monday, down nearly 2 cents from the prior week and the lowest since May 3.
Despite the decline, prices were up 12 cents from a year ago, the Energy Department said.
Motorist club AAA estimates 28.7 million people will hit the roads this holiday weekend, a 2% increase from a year ago. One-quarter of travelers are going to the beach, AAA's survey found.
Labor Day marks the traditional end to summer vacationing and the busiest driving season. The oil price drop can partly be attributed to summer's end, analysts say. That's because oil markets often are heavily influenced by demand for gasoline and heating oil, which count oil as their main ingredient.
Because the summer driving season is waning while the winter heating season is a ways off, the markets are finding little direction.
"We're in a lull between peak gasoline demand and peak heating oil demand," Wachovia economist Jason Schenker says. "In October, you're going to see a resurgence in the price of oil, and you're going to see that through the winter."
Oil prices fell 90 cents to $42.28 Monday. That was the lowest level since July 27 and was 13% below the record high, not adjusted for inflation, hit Aug. 19. Adjusted for inflation, prices have been much higher in past decades.
The decline came despite reports out of Iraq that more attacks on oil pipelines were hampering exports.
While such reports would have sparked a major rally in the oil markets just a few weeks ago, they received little attention Monday. One factor in the decline Monday was a pledge by OPEC to ensure enough oil supplies.
Robert W. Baird energy analyst George Gaspar says the movement in the markets Monday suggests the frenzy that took hold a few weeks ago has eased.
"Realism is setting into the oil price situation," Gaspar says.
Still, Gaspar says, he does not expect prices to fall too far. In the near term, prices will hover around $40. But six months from now, prices will be in the $36 to $38 range, still high by historical standards, Gaspar predicts.
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