- The Washington Times - Friday, September 28, 2001

Soft demand for oil has pushed gasoline prices down since the Sept. 11 terrorist attacks, and analysts say prices could drop further as the global economic downturn drags on.

The average price of a gallon of regular unleaded gasoline in the United States has declined to $1.48 from $1.53 the day of the attacks, according to the American Automobile Association. In the Washington area, the average price has held steady at $1.45 a gallon during the past two weeks, AAA said.

Gasoline prices could drop further as the economic downturn continues, analysts said.

"If the oil reserves continue to build, it could put downward pressure on prices," said Justin McNaull, spokesman for AAA-MidAtlantic, a regional advocacy group for motorists.

Cutbacks in airline travel since the attacks have created the need for less jet fuel, which has helped push oil prices down. But production has continued at a steady clip, in part because the Organization of the Petroleum Exporting Countries says it does not want to deepen the world's economic troubles by raising energy costs in the United States and other oil-dependent Western countries.

The cartel ratified an agreement yesterday that leaves oil supply limits unchanged, and has delayed efforts to lift crude prices out of a slump.

Roughly 8.6 million barrels of oil were refined for gasoline in the United States last week, up from 8.38 million barrels during the week of the attacks, according to the most recent statistics from the American Petroleum Institute.

The nation's gasoline inventory rose to 199 million barrels last week, from 190 million barrels two weeks ago, the trade group said.

The combination of a stable oil supply and soft demand for oil is good news for consumers, Energy Secretary Spencer Abraham said at a news conference yesterday. He urged consumers "to stay calm and not worry about the supply at your neighborhood gas station. There is absolutely no reason for consumers to hoard gasoline."

In the hours after the Sept. 11 attacks, gasoline prices jumped to as much as $3 a gallon in some parts of the country. State governments have cracked down on service station dealers that posted the prices, accusing them of price gouging.

The Energy Department will work with AAA to monitor prices across the country in case they rise unusually, Mr. Abraham said. The department has set up a hot line, 800/244-3301, for consumers to report unusual price spikes, and AAA has established a Web site, www.fuelgaugereport.com, that shows the average gasoline prices in every state.

AAA President Robert L. Darbelnet, who joined Mr. Abraham at the news conference, said consumers should not try to take advantage of the price dip by storing gasoline at home.

"The only place gasoline belongs is in your tank or in a specially designed tank for refueling purposes," Mr. Darbelnet said.

Mr. Abraham said the government may take advantage of the lower oil prices to boost the nation's strategic petroleum reserve. The government has 54 million barrels on reserve, which it can release into the market in case of a national emergency.

The reserve has the capacity for an additional 100 million barrels, Mr. Abraham said.

Filling that capacity "is a matter under serious consideration," he said.

The dip in gasoline prices could hurt the oil industry over the long term, analysts say.

"In 2002, the oil demand outlook is the worst in 20 years the first year of no demand growth since 1983," Peter Nicol, an oil-industry researcher for European banking group ABN Amro, wrote in a research note.

In the immediate aftermath of the attacks on the United States, oil prices briefly spiked to $31.05 but have fallen sharply since. Brent crude futures stood six cents lower at $22.94 a barrel yesterday, after sinking to their lowest level for nearly two years Wednesday.

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