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Pardon at the Pump


Gas dips below $4, but not for long.

The Lundberg Survey shows that gasoline prices have dipped below $4 a gallon. But don't count on prices staying low - or at least low by current standards.

On Friday, the average price of gasoline at self-serve stations was $3.99 a gallon for regular. Mid-grade gas was $4.13 a gallon and premium sold for $4.24 a gallon.

Lundberg's survey of 7,000 gas stations nationwide was released Sunday.

The prices are an average 11.7 cents a gallon lower than two weeks ago and are the lowest since May 16th. However, the average price per gallon was still $1.11 higher than it was a year ago.

Lundberg found the cheapest gasoline was $3.61 a gallon in Wichita, Kansas and the most expensive was $4.43 a gallon in Anchorage, Alaska.

The price for a barrel of oil peaked on the New York Mercantile Exchange at $147.27 on July 11th and recently fetched $124.94.

The economic slowdown, especially in the U.S., appears to be driving prices lower. India and China sell goods and services to the United States, Europe and Japan. If demand declines, India and China will cut oil use, easing the upward pressure on prices.

Oil supplies also appeared to stabilize last week and Chevron (CVX) reopened a pipeline in Nigeria following an attack in June. Long-term, the U.S. may lift its ban on off-shore drilling.

But oil is traded worldwide on futures markets and manic swings are common - sometimes as much as $5 a day. This suggests continued roiling in the markets ahead.

Tropical storm season is here and hurricanes could disrupt production in the Gulf of Mexico, sending prices higher. Much of the U.S. refining capacity is located on the Gulf Coast and a major storms could disrupt production.

The Middle East is uncertain and Iran's nuclear ambitions are still unresolved.

So, the current dip in prices at the pump is almost certain to be temporary. It might be smart to take advantage of lower prices at your neighborhood Exxon-Mobil (XOM) or Conoco (COP) station now.
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