Cheapest gas prices in area

New Orleans motorists pay cheapest gas prices

New Orleanians paid the lowest gas prices in the country in July. But prices are expected to rise again by Labor Day as international terror concerns drove crude oil futures prices to record levels above $44 last week.

The Lundberg Survey, a semimonthly poll of nearly 8,000 gas stations across the United States, said New Orleans stations sold regular gasoline for an average of $1.73 a gallon, cheapest in the nation. But energy costs can jump quickly.

We're in a very volatile market, said Don Redman, spokesman for Louisiana AAA. We're not expecting any major jumps but of course that all depends on if there are any major disruptions in the supply or at the refineries.

Rising global demand, which has pushed daily consumption above 82 million barrels a day from less than 78 million per day at the start of the year, coupled with uncertainty about Russian and Venezuelan production capacity, terrorist attacks on oil pipelines in Iraq and the threat of attacks in the United States caused crude oil future prices to rise to a record $44.15 a barrel Aug. 3 on the New York Mercantile Exchange.

Those prices began to recede as U.S. gasoline supplies increased and Russian oil giant Yukos was allowed to continue production despite owing $3.5 billion in back taxes. Yukos produces 1.7 million barrels per day, about 2 percent of total global production.

At press time last Thursday, crude futures were at $43.85 a barrel and rising.

Traders have added a terrorist premium into rising crude prices, which is expected to end the two-month reprieve and drive pump prices up. Crude oil prices had dipped below $36 a barrel in June.

Redman said market instability has some analysts predicting crude prices could top $50 a barrel. We hoped we would be seeing prices drop significantly at this point but these global issues are keeping prices high, he said. We've got a lot of factors working against us.

Even as fuel prices rose across the country, gas in the New Orleans metropolitan area remained well below the national average of $1.88.

Last Thursday, neworleansgasprices.com, a regional affiliate of gasbuddy.com, listed Terrytown Shell as having the lowest price for regular unleaded in the city at $1.59 a gallon. Ted Bethea, an independent franchise owner of the station, said Shell is keeping prices low to regain market share following the sulfur contamination of the company's fuel in May.

He said Shell surveys local gas prices twice weekly to determine fuel prices, and any increase in crude prices will increase gas prices.

At the close of business Thursday, a gallon of regular unleaded at his station sold for $1.69.

New Orleans drivers last week paid an average of $1.79 for a gallon of regular unleaded gasoline, according to the AAA Fuel Gauge Web Site, which averages credit card transactions at more than 60,000 filling stations around the country. That figure is up 2 cents from AAA's July average and up 34 cents from this point in 2003.

The southeastern United States always enjoys the lowest gasoline prices mainly due to proximity to production along the Gulf Coast and supply lines along pipeline routes, said Jacob Bournazian, an economist in the petroleum division of the Department of Energy.

Another factor keeping fuel costs low is most of the region uses conventional gasoline, except for Houston and Dallas, which require use of more expensive reformulated gasoline, Bournazian said.

Reformulated gasoline burns cleaner than conventional gasoline but costs about 13 cents per gallon more, according to the Energy Information Agency, which requires the use of reformulated gasoline in areas with bad air quality.

Louisiana is a conventional gasoline state. but the EPA is reviewing an order to make Baton Rouge a reformulated gasoline area.