Once Labor Day holiday is past, gas prices expected to ease

Refinery problems and production cuts look to be decreasing.

The Associated Press

LOS ANGELES -- Americans who take to the highways for the Labor Day weekend will pay dearly to fill their gas tanks.

Since late June, the average price of gasoline nationwide has climbed 11.5 cents per gallon to $1.31, according to an Aug. 20 Lundberg Survey. The increase followed an 8.5-cent jump in March and a 14-cent spike in early April.

California motorists, who use more costly blends designed to reduce pollution, have been hit even harder. The average price has risen 14 cents since late June to $1.47, according to Lundberg figures.

"Gas prices are so high. It's ridiculous," said Eric Swanger, 21, of Los Angeles, as he filled up at a Mobile station, where a gallon ranged from $1.41 to $1.61.

However, relief from nearly seven months of increases may be in sight. The end-of-summer holiday traditionally marks a drop in demand, and U.S. refinery breakdowns that squeezed supplies appear to be under control.

"The price is going to drop slowly," said Bill Berman, a petroleum industry analyst and publisher of the Price Pump Report. "It will drop more quickly on the East Coast because there's more price competition. It will drop more slowly as you go west of the Mississippi because there are fewer refiners and fewer gasoline stations."

Oil companies have blamed the increases on market forces, including refinery problems and cuts in world production.

The increases have prompted the Federal Trade Commission to launch an investigation of West Coast prices. Attorneys general in California and Nevada are cooperating in a separate probe of gas prices in their states.

In the community of Castaic in northern Los Angeles County, Jesus Benavidez of Norwalk, Calif., filled two personal watercraft at a Shell station where prices for self-serve gas ranged from $1.60 to $1.78.

"It's just going higher and higher. You just can't seem to get a break," Benavidez said.

But like other holiday travelers, Benavidez was prepared to spend more to enjoy his trip. Twenty dollars' worth of gas for the watercraft would give him four hours of riding time on Lake Castaic.

"The more fun you want to have, the more gas you've got to get," he said.

Prices began to climb in February, after the Organization of Oil Exporting Countries announced a cut in production.

World supply has been tightened further by increasing demand in Asia, where South Korea, Thailand and other countries are Emerging from severe recession.

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