Gasoline prices in reverse

Gasoline prices are poised to fall as Memorial Day approaches, a welcome change for motorists who have gotten used to seeing increases cut into their summer vacation money.

Experts who had been predicting a national average of more than $3 per gallon by Memorial Day now say prices have likely peaked just beneath that threshold. Rising supplies and concerns about the global economy have helped send wholesale gasoline prices plummeting by 22 cents a gallon since last week.

"Gasoline supplies are about as good as they've ever been going into the summer driving season," says oil analyst Phil Flynn of PFGBest in Chicago.

Predictions of $3-a-gallon gasoline have come true in Nevada and nine states, including California, Hawaii, Illinois, New York. Data from AAA show that the average price for a gallon of regular, self-serve unleaded gasoline was $3 last week. Distance from the nation's refining hub along the Gulf Coast or high taxes are contributing factors.

But average prices have retreated slightly and are below $3 both statewide and locally, AAA said Wednesday in its Daily Fuel Gauge Report.

Prices in Las Vegas averaged $2.937 on Wednesday, down 0.5 percent from $2.951 a week ago, AAA said. The Las Vegas average price was up 1.3 percent from $2.899 a month ago and up 32.5 percent from $2.217 a year ago.

The statewide average price for Nevada was $2.991 on Wednesday, AAA said, down 0.3 percent from $3 a week ago. Nevada's average price was up 1.2 percent from $2.955 a month ago and up 33.8 percent from $2.235 a year ago, AAA said.

Michael Geeser, spokesman for AAA, said he expects some gasoline price relief, but not until after Memorial Day. He said he suspects, based on historical trends, that gasoline prices will rise slowly in the weeks remaining before the holiday.

Geeser said he expects small drops in gasoline prices after Memorial Day and bigger drops after Independence Day.

Although $3-a-gallon may signify an emotional barrier for some consumers, Geeser said it doesn't pack the wallop it might have before.

After all, he said, the price was briefly here in Las Vegas and exists now in Reno, where drivers are paying $3.049 on average and where he spoke from Wednesday.

Furthermore, Geeser said, just two summers ago, the first digit in fuel prices was not 3 but 4. On June 21, 2008, Las Vegas gasoline prices averaged a record $4.279 a gallon.

The decline in prices is starting to filter down to drivers, but it will take several weeks for the full effects to be reflected in pump prices, which average $2.90 nationwide.

By summer, the nationwide average could be below last summer's peak of around $2.70 a gallon, said Tom Kloza of Oil Price Information Service. In July 2008, the retail price of regular gasoline peaked at $4.11.

Geeser noted that partly because of the Greek debt crisis, the euro has recently weakened against the American dollar, helping to push crude oil prices lower. Oil prices fell 14 percent last week, according to The Associated Press.

Last summer, by contrast, the dollar was fading against the euro, pushing oil prices higher, Geeser said.

Economists say the coming drop in energy costs will not have a significant impact on overall consumer spending or economic growth. But drivers will feel better having a little more money to save or spend on clothes, dinner or a summer vacation.

From their peaks on May 3, oil prices have declined by 13 percent to $75.65 a barrel. Wholesale gasoline prices have declined by 9 percent to $2.21 a gallon.

Associated Press writer Mark Williams contributed to this report.