For Immediate Release: January 27, 1998
Media Contact: Claudia Chandler -- 916 - 654 - 4989


SACRAMENTO - California consumers may see gasoline prices drift down for the next several weeks, the California Energy Commission said today. Commission analysts said low crude oil prices caused in part by a mild winter, decreased fuel demand in Asia, increased global oil supplies and low winter time production costs are triggering the relief at the gas pumps.

As of January 26, the average prices of a gallon of unleaded gasoline in California was $1.23, down 20 cents from their mid September 1997 high. The Energy Commission said prices below $1.19 can be seen in some areas of the state.

While gasoline prices seasonally go down at this time of year, January's decline was more pronounced than usual. "This is good news for California consumers," said Stephen M. Rhoads, Energy Commission Executive Director. "We saw a high in September when the price of a gallon of unleaded gasoline rose to $1.43. Gasoline is vital to California's economy. Lower prices mean lower costs in moving goods and people around the state."

Commission analysts say the price breaks are partly related to the decline in crude oil prices. The price of North Alaskan crude, the source of almost half of California's fuel supply, closed January 23 at $13.65 a barrel, down considerably from October's spot price of $20.45. Meanwhile, crude oil demand has decreased in Asia due to the economic downturn in that region of the world, and a mild winter attributed to the effects of the El Nino phenomenon, adds up to lower prices at the gas pumps.

A mild winter translates to less heating oil consumed, reducing the demand for crude oil. Commission analysts said the Asian economic crisis has also lowered demand there and is putting a downward pressure on crude prices.

The growth in worldwide crude production is expected to continue with Iraq soon resuming to ship 800,000 barrels a day of crude to world markets, under the United Nations-sanctioned Oil for Food program. In the meantime, OPEC is also raising production quotas.

With all these developments factored in, consumers are likely to benefit from gas prices which should drift down slightly for the next several weeks, Energy Commission analysts said.

Although consumers are benefitting from the price decline, the trend could just as easily be reversed by such unforeseen events as an extended deep freeze in the United States and Europe, the renewal of Iraqi hostilities, or a major unplanned refinery outage.

The Energy Commission noted that while crude prices and decreased production costs are usually followed by lower prices, retail gasoline prices in the short term, however, are determined by local market competition. "Consumers should shop around for the lowest prices which would ensure competition in the marketplace," said Rhoads.

Current and historical gasoline price information is available on the Energy Commission's Web site at:

Editors Note: Gasoline prices are updated every Friday, should you decide to do a follow up or await further developments on the gasoline front. Visit our Web site or call (916) 654-4989 for the latest price information.