October 14, 2008 / 9:12 PM / 11 years ago

Gasoline price has record drop to 8-month low

WASHINGTON (Reuters) - The average U.S. retail gasoline price fell 33.3 cents over the last week to $3.15 a gallon, the biggest price decline ever recorded by the government, the Energy Department said on Tuesday.

The old record decline of 16.9 cents a gallon occurred during the week of the September 12, 2005, when fuel costs fell after the government announced it would release millions of barrels of emergency crude oil to help replace petroleum supplies disrupted by Hurricane Katrina.

The national price for regular unleaded gasoline is the cheapest since February 25, but it remained up 39 cents from a year ago, the department’s Energy Information Administration said in its weekly survey of service stations.

Average gasoline prices were less than $3 a gallon in the Midwest and the Gulf Coast, and the EIA said prices nationwide could fall that low by Halloween.

“Certainly, we’re thinking that prices could very well be under $3 (nationwide) by the end of the month,” said EIA senior oil analyst Joanne Shore.

Gasoline demand is off 5.3 percent from a year ago, and crude oil costs have fallen to $79 a barrel from a peak of more than $147 in July.

“Right now, I don’t know any of us that have seen reductions in price or reductions in demand at the almost warp speed that we’re seeing at the present time,” Red Cavaney, president of the American Petroleum Institute, said.

Cavaney would not speculate how low pump prices could go, but he said the drop in petroleum demand will “put incredible downward pressure” on fuel costs.

He said given the country’s economic problems, cheaper gasoline “couldn’t come at a better time...that falls in the good news category for the consumer.”

In the EIA’s weekly survey, gasoline was the most expensive on the West Coast $3.42 a gallon, down 15 cents. San Francisco had the highest city price at $3.60, down 12 cents.

The Gulf Coast had the lowest regional price at $2.99 a gallon, down 45 cents. Cleveland had the lowest city pump price, down 38 cents at $2.90.

The EIA also reported gasoline prices were down 29 cents at $3.46 in Chicago; down 12 cents at $3.44 in Los Angeles; down 30 cents at $3.38 in Miami; down 18 cents at $3.36 in Seattle; down 24 cents at $3.22 in Denver; down 24 cents at $3.16 in New York City; down 27 cents at $3.06 in Boston; and down 32 cents at $3.03 in Houston.

Separately, the average price truckers paid for diesel fuel declined 21.6 cents to $3.66 a gallon, the lowest since early March, but up 62 cents from a year earlier, the EIA said.

The New England states again had the most expensive diesel at $3.89 a gallon, down 14 cents. The West Coast had the cheapest fuel at $3.62, down 23 cents.

Reporting by Tom Doggett; Editing by David Gregorio

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