Fuel prices continue to move downward

Gasoline prices continued to slide nationwide and in California over the last week, a federal survey showed, but all eyes were on the plunging price of crude oil, which fell more than $3 a barrel Monday amid a dramatic sell-off by speculators.

The sharp decline in crude oil prices, reversing a climb to last week’s record-high close, should yield lower pump prices for consumers through the fall, said former trader Stephen Schork, who publishes a weekly report on oil and other markets.

“Despite what all the Chicken Littles were telling us back in March, we are now paying less for gasoline at the peak of driving season than we were in May,” Schork said. “I expect gasoline prices to keep falling to the end of September.”

Nationwide, the average cost of self-serve regular fell 3.8 cents to $2.838 a gallon Monday, according the Energy Department’s weekly survey of retail gas prices. The average hit a record high of $3.218 a gallon in late May.

In California, the average dropped by 4.4 cents to $3.016 a gallon -- down from a May 7 high of $3.461. The average price in Los Angeles, the state’s largest gasoline market, slipped below $3 for the first time since early March, falling 4.3 cents to $2.965.

On the New York futures market, which is widely used as a benchmark for wholesale prices in California and elsewhere, the cost of gasoline for September delivery fell more than a dime to $1.926 a gallon. A barrel of U.S. benchmark oil for September delivery closed down $3.42 to $72.06 -- well below last week’s record-high close of $78.21.

Schork attributed the free fall in oil prices to a wave of selling by speculators anxious to cash in on last week’s surge ahead of a potential correction.

In the U.S., oil supplies are not a concern, as stockpiles remain ahead of year-ago levels. In addition, there are no world events that can be blamed for last week’s jump or for Monday’s crash, Schork said.

“It was a speculator bubble that got us close to $80, and today was the air being let out of the bubble,” he said. “We have so many large speculators in this market . . . and [they] had their hands caught in the cookie jar.”

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