Gas Prices Ease For Summer, But Don't Relax Yet

This past week marked the fifth consecutive week of falling U.S. gas prices. Tom Kloza, chief oil analyst with the Oil Price Information Service, explains the price decline and tells us whether the downtick will be sustained this summer.

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JACKI LYDEN, host:

Economic troubles aside, Americans are finally getting some relief from high gas prices. In fact, this past week marked the fifth consecutive week of falling prices in the United States.

Mr. TOM KLOZA (Chief Oil Analyst, Oil Price Information Service): The biggest reason was that prices were too high in the first place. I mean, the $4 and $5 and $6 talk was really hyperbole.

LYDEN: That's Tom Kloza, chief oil analyst with the Oil Price Information Service. The national average for a gallon of regular fuel is now $3.65. That's around 25 cents less than a month ago.

Mr. KLOZA: The $4 numbers are really disappearing. I really suspect that most of the country is going to see $3.25 to $3.75 during the summer.

LYDEN: But there is a scenario which could lead to even lower prices at the pump.

Mr. KLOZA: If sovereign debt worries turn into a worldwide contagion and you see a recession in Europe or in the United States, then prices could drop. But that's not something you want to root for.

LYDEN: Many analysts warn that gas prices could spike since global demand for crude oil, a key component in gasoline, is high. And there's always a chance for supply disruptions, particularly with unrest in the Middle East and our coming hurricane season. Tom Kloza says it all amounts to discernible shifts in consumer behavior.

Mr. KLOZA: In April and May, people drove less. In June, so far, people are driving about as much as they did last year. My suspicion is that when they get 401(k) reports for second quarter in July, that they may drive a little bit less. Because I do think that regardless of the drops that we see, we're still going to be paying probably 75 cents, on average, more than we paid last year.

LYDEN: And for anyone thinking about planning a trip this summer or purchasing a new car, Kloza says we've hit a baseline price for a gallon of gas.

Mr. KLOZA: I don't think that anyone should think about paying less than $3 for any sort of sustained period of time.

LYDEN: Tom Kloza, chief oil analyst with the Oil Price Information Service.

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