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San Francisco - Retail gasoline slid to the lowest level in almost four months as refineries boosted production.
Pump prices averaged $3.593 a gallon Monday, down 4.2 cents from the previous week and the lowest since March 31, data posted on the Energy Information Administration's website show. Gasoline was 2.4 percent below 2013 levels.
Travelers and commuters are seeing relief at the pumps as U.S. refiners process a record amount of crude oil. A production boom from U.S. shale formations and Canadian oil sands pushed some domestic crudes down last month to multi-year seasonal lows versus foreign grades. U.S. and international benchmark oil prices have retreated as production in Iraq has been unaffected so far by unrest there.
"Refineries are running really smoothly right now and they're making lots of gasoline," Michael Green, a spokesman for Heathrow, Fla.-based AAA, said by telephone from Washington. "There's also a stalemate in Iraq that's helped stabilize the markets because there's less fear that rebels will disrupt oil production and exports."
Refinery crude runs in the U.S. climbed to 16.6 million barrels a day in the week ended July 11, the most in Energy Information Administration data going back to 1989, and plants operated at 93.8 percent of capacity, the highest level since August 2005.
Retail gasoline may "drift down slowly by a few more cents" should refineries in the U.S. continue to run at high rates and hurricanes steer clear of the Gulf, Green said. The six-month Atlantic storm season runs from June 1 through Nov. 30, with the statistical peak Sept. 10 and the most activity from mid-August to mid-October.
The second tropical system of the season formed far east of the Lesser Antilles island chain Monday, the National Hurricane Center's website shows.
The escalating tension between the West and Russia, the fighting in the Gaza Strip, and the violence in Iraq will temper the decline in the pump price, Andy Lipow, president of energy consulting firm Lipow Oil Associates in Houston, said by telephone. Both Brent and WTI capped their first increases last week in a month on the conflicts.
"I expect the retail price to go down to about $3.55 a gallon over the next week or so," Lipow said. "Then we'll have to see if these events overseas result in the market turning around and costing the consumer more money."