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Holiday gas prices down from last year

Filling up for the Labor Day weekend road trip will cost Massachusetts motorists about 20 cents a gallon less than it did this time last year.

While there could be a few upswings in gas prices into September, the chief executive of New England's biggest locally based gasoline retailer, Joseph Petrowski of Gulf Oil LP in Newton, said yesterday he can envision local prices easing another 20 to 35 cents by Thanksgiving and Christmas, to within a dime of $2.40 per gallon.

Across Massachusetts, regular unleaded gasoline was selling for an average $2.67 a gallon yesterday, according to the newest survey by the American Automobile Association and Oil Price Information Service. That compares to $2.87 a month earlier, and the same $2.87 a year earlier.

With a so-far mild hurricane season inflicting no major disruptions on US gasoline refining and transportation networks, "the trend has been a gradual easing of prices, which is good," said Art Kinsman, a spokesman for the AAA's Southern New England chapter. "Perhaps this fall will see better prices."

AAA is forecasting zero growth in travel demand this Labor Day weekend compared to last year. It estimates 34.6 million Americans will travel more than 50 miles over the holiday, the same as last year, with a slight increase in people traveling by air offsetting a slight change in people traveling by car or recreational vehicle, Kinsman said.

Financial markets and the US Energy Department are sending hard-to-reconcile signals this week about future gas prices. Earlier this week, the government reported the country had at current consumption rates just 20 days' worth of gasoline in storage during the week that ended last Friday. That's the lowest inventory since the data began getting collected in 1991. Fears of tight supply often cause speculators to bid up the price of gas.

But yesterday, in trading on the New York Mercantile Exchange, contracts for delivery of gasoline in October fell 0.7 percent in price, as prices retreated from a run-up earlier in the week.

Wholesale gasoline prices can be especially volatile in September in New England because many retailers try to keep their supplies tight and use up as much as they can of the more-expensive summer-formula gasoline required by air-pollution laws before they can switch to cheaper winter blends in the last two weeks of September. Because gasoline evaporating from tanks is a major creator of smog, the Environmental Protection Agency requires gas stations in New England to sell during summer months a blend of gasoline - usually costlier - that evaporates less readily than standard colder weather blend.

Gulf's Petrowski, in an interview, said, "I think for the next 20 or 30 days we'll probably drift up a little bit, 10 or 15 cents, as we are going through the changeover season."

But barring a major disruption like a hurricane or unusual turmoil in oil-producing regions abroad, prices should begin turning back down, and "toward the holiday season, I think we'd be in the $2.30 to $2.50 range," Petrowski said. "What would take gas prices down to the $2 level - the only thing capable of doing that - is a recession, and while I like the idea of lower gas prices, I wouldn't wish for a recession."

Gulf sells fuel through 1,900 independently owned Gulf-branded stations in the Northeast and also supplies 550 Exxon-branded stations, including 11 at Massachusetts Turnpike service plazas it will begin switching over to the Gulf brand next month.

In a long-awaited report on earlier gasoline price spikes, the Federal Trade Commission yesterday released a report concluding that a jump in gas prices during the spring and summer of 2006 to over $3 in many areas represented only "the normal operation of the market." The commission found no evidence of gasoline refiners conspiring to hold back supply and drive up prices.

But US Representative Bart Stupak, a Michigan Democrat who has sponsored a bill to crack down on alleged gasoline price gouging, said the narrowly focused investigation failed to ask the right questions and is "further proof that the Bush administration will ignore the evidence and distort the facts to protect Big Oil companies. Rather than protecting consumers, the Bush administration makes excuses for Big Oil."

Peter J. Howe can be reached at howe@globe.com.

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