Thanksgiving gas prices flat amid stagnant economy

As Californians hit the highway for Thanksgiving, they'll pay roughly the same amount for gasoline as they did at Halloween. And Independence Day. And Easter.

Gas prices in both California and the nation have changed remarkably little in 2010. They have, in fact, stayed as flat as the economy, whose lack of direction has kept gas prices stuck firmly in place.

With the exception of a few weeks in February, California's average price for a gallon of regular has remained at or just above $3 per gallon, according to the AAA automotive service. The state's average now stands at $3.17, just 24 cents higher than its lowest point this year.

For most of the past decade, U.S. drivers have had to endure wild, budget-busting swings in the price of gas every year, with the annual highs and lows sometimes more than $1 apart. But now a stagnant economy has created a relatively stagnant market for crude oil, gasoline's raw ingredient. That, in turn, keeps gas prices stable.

"There was some volatility day to day, but if you look at the whole year, crude oil really didn't move that much," said Denton Cinquegrana, senior editor for West Coast fuel markets at the Oil Price Information Service.

Oil isn't cheap, closing Tuesday at $81.25 per barrel on the New York Mercantile Exchange. But crude has traded between $75 and $85 for most of 2010, a narrow range compared to recent years.

Prices stay in check

America's sluggish economic recovery prevents prices from rising much higher, while rising oil use overseas keeps them from falling too far. So does the Organization of the Petroleum Exporting Countries, said David Kirsch, director of market intelligence for the PFC Energy consulting firm.

"King Abdullah (of Saudi Arabia) has already said that $75 is a fair price," he said. "To get much below $75, you're placing a bet that OPEC really won't try to support that price."

The result: Gasoline prices in California have changed less in 2010 than in any other year during the past decade. They are high by historic standards, but they are stable.

California drivers have had a hand in keeping them that way.

Gasoline use in the state peaked in 2006 and has fallen since, first because high prices forced drivers to conserve, then because the recession tossed many of them out of work. California uses its own pollution-fighting fuel blends made by a limited number of refineries, and tight supplies have often amplified gas price spikes in the state. But with demand down, California has ample supplies. Until the economy improves, the state's refineries will have a hard time raising prices by a substantial amount.

"We've had a five-year decline in gasoline demand - that's never happened since World War II," said Gordon Schremp, senior fuels specialist for the California Energy Commission. "So it comes back to the economy. Do more people get jobs and start driving to work again?"

Slight rise possible

Californians driving off to visit family or friends for Thanksgiving may see a small price increase this week, because gas stations often raise their prices in advance of holidays. AAA estimates that 4.7 million Californians will hit the road for Thanksgiving. After that, however, prices will continue to track the economy, analysts say.

"This week should be stable, but prices could be choppy," said AAA spokesman Matt Skryja. "Traditionally, anytime there's a big holiday, you have a slight rise in prices."

E-mail David R. Baker at dbaker@sfchronicle.com.

This article appeared on page D - 1 of the San Francisco Chronicle