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$3 for gas? Not so fast

Dire predictions of $3-a-gallon gasoline this summer haven't materialized, with many parts of the country seeing lower prices at the pump than a year ago.

The reason: an unexpected abundance of supply as the oil industry rushed to cash in on the high prices.

As of Friday, the national average price of gasoline, including all grades and taxes, was $1.51 _ down 12.8 cents since June 22. That means consumers are paying 16 cents a gallon less than a year ago, and 25 cents a gallon less than at the price peak of $1.76 in May, according to the Lundberg Survey of about 8,000 gas stations nationwide.

Prices have dropped in the Tampa Bay area as well. According to AAA, the average price for regular unleaded in its Tampa-St. Petersburg-Clearwater survey over the weekend was $1.344, compared with $1.537 a month ago.

The spring price surge was sparked by an April report that supplies of reformulated gasoline were 4-million barrels below a year earlier, said Michael Lynch, chief energy economist at DRI-WEFA, an economic consulting company in Bedford, Mass. Because the gap between supply and demand is the narrowest in 25 years, speculators overestimated the severity of the "very marginal" shortage, Lynch said.

"In a nutshell, people overestimated the tightness of supply. Speculators drove up prices," Lynch said Monday. Then, he said, "the industry response to the higher prices resulted in a glut of supply."

The report comes as President Bush has dispatched Vice President Dick Cheney, Cabinet members and sympathetic lawmakers on a tour of the country promoting the administration's energy strategy. Bush's plan calls for increased production of oil and natural gas; upgrading the networks that carry petroleum products and electricity; increased reliance on nuclear power; and stepped-up conservation and use of such clean fuels as wind and solar power.

The administration has warned against complacency over falling prices, saying they just as easily could start rising again.

_ Times staff writer J. Nealy-Brown contributed to this report.

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