Good News at the Pump

When Iran and Iraq started firing missiles and rockets at Persian Gulf oil tankers this spring, some energy experts predicted that gasoline prices would rise. But that has not been the case. Prices at the pump are drifting downward. The U.S. average was $1.246 per gal. just before the Independence Day holiday. That was the lowest midsummer price since 1979 and 2.4-c- per gal. below last year's Fourth of July level. Prices for leaded regular have, in some cases, dropped to around $1 in such metropolitan areas as Houston and New York.

The main reason for the good news is that cold weather caused higher than normal heating-oil demand during the last half of the winter. That, in turn, resulted in the production of more gasoline; two gallons of gasoline are produced whenever a gallon of heating oil is refined. The excess fuel went into storage tanks and is now helping to depress prices. The U.S. has gasoline stocks amounting to 250 million bbl., fully 13% more than at the same time last summer.