Gas Prices Drop for First Time This Year

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.

The weighted national average price for all three grades of gasoline fell 6 1/2 cents to $2.04 per gallon Friday after rising more than 59 cents since mid-December, analyst Trilby Lundberg, who publishes the semimonthly Lundberg Survey (search), said Sunday. The survey regularly polls nearly 8,000 gas stations across the United States.

The average price for all grades on the last survey May 21 was slightly above $2.10 per gallon.

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

The lower oil prices can be attributed to oil production above the official quota set by the Organization of Petroleum Exporting Countries (search), and OPEC's recent announcement that it would increase production this summer to stabilize prices, Lundberg said.

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

"Whether for the rest of the summer gas prices will continue to trend down depends on OPEC's follow-through to increase oil output and how strong our gasoline demand turns out to be," Lundberg said. "We always consume the most in June, July and August."

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 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.

The lowest average price for self-service regular gas was in Tulsa, Okla., where a gallon was about $1.75. The highest prices were in the San Francisco Bay area at $2.32 a gallon, Lundberg said.