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Enjoy lower gas prices while you can: they could soon increase

Depending on the expert, the dip in prices is due to the elections, or just a normal fall occurrence.

By SCOTT BARANCIK
Published October 27, 2006

Nigerian pipeline attacks. Chaos in Iraq. OPEC oil cutbacks. Gargantuan profits at Exxon Mobil Corp.

There are plenty of reasons why gas prices might be climbing right now. But for the third straight month - and with just two weeks left before election day - prices at the pump have slipped to a 10-month low.

On Thursday, Tampa Bay area residents paid an average of $2.13 per gallon of unleaded gas, less than anywhere else in Florida, according to the Oil Price Information Service. That was 28 percent less than in early August, when the average local price crept within three cents of $3 per gallon. So far, bay area gas prices have fallen 14 cents in October, vs. 52 cents in September and 16 cents in August.

Don't expect the drop to continue much longer, however.

Gas prices almost always rise before major travel holidays like Thanksgiving. And although wild cards such as weather and war can play havoc with pricing forecasts, the fundamental measures of worldwide supply and demand point directly up, said Gregg Laskoski, managing director of AAA Auto Club South.

So why have gas prices continued to fall? Jeffrey Saut, managing director of equity research at brokerage house Raymond James & Associates in St. Petersburg, said the key driver was a move by New York brokerage Goldman Sachs in July to eliminate gasoline contracts from its commodity index.

"Gasoline prices were probably going to come down a little anyway" due to seasonal factors, Saut said. "But Goldman Sachs gave them a real shove. And they staged it in incremental amounts through, guess what, November."

Tom Kloza, chief analyst at the Oil Price Information Service, isn't riding in the conspiracy parade. "That would be giving politicians of both parties far too much credit for competence," he said. His explanation? Cyclical patterns. "Fuel prices are prone to move lower in the last 100 days of the year every year," he said. "It's like fall foliage."

Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.

[Last modified October 26, 2006, 23:44:20]