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Gas prices defy expectations, decline as Memorial Day weekend approaches

As gas prices continue to drop, Tampa Bay motorists are seeing some confusing signs of change.

Fill up at any one of a handful of stations in Plant City and you'll pay between $3.45 and $3.48 per gallon, according to GasBuddy.com, a website that tracks gas prices.

But if you're expecting those same prices in Clearwater, New Port Richey and Temple Terrace, you're in for a surprise. Some stations are still charging more than $3.90 a gallon.

Why the disparity? Competition.

"Stations all want volume," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, "and what that means is the consumer wins."

Gas stations close to one another could easily get into a price war, forcing them to drop their price a penny at a time to draw in extra drivers.

That's why it's no surprise that the five cheapest gas prices in Tampa Bay are all on the same stretch of road in Plant City.

"Everyone wants that lowest price," DeHaan said.

For stations with high prices, the opposite is likely the case. They just do not have enough competition around them to force the prices down, DeHaan said.

Until recently, high wholesale oil prices kept the cost at the pump relatively consistent across Tampa Bay. Dropping gas prices at the pump significantly would have eaten into already slim profits, DeHaan said. Gas stations don't make much money when prices are trending up, he said. That's been the case for the past few months.

"Gas stations hate high gas prices as much as motorists," DeHaan said. "I guarantee you."

But earlier this month, the cost per barrel for oil plummeted, making it cheaper for gas stations to buy fuel.

As gas stations profit margins grew, they recouped losses and prices started inching down.

"They don't pass along the entire drop," said DeHaan. "They drop prices very slowly and make more money."

In Tampa Bay, gas prices have dropped about 10 cents in the past week. They're expected to go down another five cents this week as people gear up for the long holiday weekend, according to AAA.

It's a somewhat unusual trend for this time of year.

Typically, Memorial Day means the start of higher gas prices, said Jessica Brady, a spokeswoman for AAA Auto Club South.

A gallon of regular gas cost about $3.76 on Monday, down from $3.86 a gallon about a week ago. It cost $3.79 a gallon a month ago.

"This is the first time we've had a trend with oil under $100 per barrel," Brady said.

Oil experts have given several reasons for the decrease: Demand in the United States is down, so supplies are increasing; international demand is expected to slow; and the dollar is gaining ground on the euro, increasing its purchasing power.

Although this long Memorial Day weekend will have more people out on the roads, Brady said she didn't think it would have much impact on overall gas prices.

It's difficult to say where the market will go in upcoming weeks. Several experts predicted earlier in the year that gas prices would hit $4 per gallon.

"There's so much money in the oil market right now," said Brady. "It's so volatile. It's reacting to everything."

More than $1 higher than a year ago

Average prices for a gallon of regular unleaded gas:

Tampa Bay Florida United States
Monday $3.764 $3.814 $3.843
Week ago $3.859 $3.911 $3.955
Month ago $3.791 $3.830 $3.856
Year ago $2.747 $2.797 $2.801

Source: AAA/Oil Price Information Service

Gas prices defy expectations, decline as Memorial Day weekend approaches 05/23/11 [Last modified: Tuesday, May 24, 2011 3:32pm]
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