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Montana's prices still higher than surrounding states

Much higher than last year Š much lower than predicted.

As Memorial Day weekend and the summer travel season approach, whether you see your gas tank as half empty or half full probably depends on your point of view. The $1.61 average in Montana for a gallon of regular - the typical price in Missoula is $1.57.9 - is quite a bit more than one year ago, when prices averaged $1.43 in the state.

But it's significantly less than the $2-a-gallon prices predicted a couple of months ago, just prior to the start of the war in Iraq.

Nationwide, the average price is $1.49.7, according to AAA Montana. The lowest prices are in the Southeast, where gas averages $1.38 gallon.

The West is highest, with an average of $1.63. Hawaii's prices top the list, at $2.04.6, followed by $1.87.8 in California.

"California, with its reformulated (and more expensive) gasoline that meets California emission requirements, really skews the average for the West," said Gail Ambercrombie, executive director of the Montana Petroleum Association. Neighboring states that rely on California refineries for some of their product are also affected by the higher prices. In Arizona, the average Friday was $1.71.3. In Nevada, it was $1.75.7.

Gas prices are cheapest in Georgia, where the average price Friday was $1.30.7.

AAA surveys 60,000 self-service gas stations daily, and posts its findings at www.fuelgaugereport.com. Nationally, AAA says gas prices have plummeted 22.5 cents a gallon since March, when the average climbed to a record high of $1.722.

Crude oil prices, which reached almost $40 a barrel prior to the war, are now less than $28. That, plus more imports from Europe and an increase in oil and gasoline production from Venezuela, which had endured a protracted labor strike, are responsible for the price drop, according to AAA.

Montana's $1.61.2 average remains higher than any of the states surrounding it. Idaho's average is a penny less, while North Dakota comes in at $1.53.7, South Dakota at $1.51.6, and Wyoming at $1.48.9.

What happens to gasoline prices once the summer travel season hits depends on a lot of things. Typically, highways fill up and prices rise come Memorial Day.

"It will be interesting to watch," Ambercrombie said, "what with Iraq resolved and the price of crude dropping.

"We showed a decrease nationwide in fuel consumption during the war," she went on. "Was that because prices were too high for people? Or because nobody was out doing anything, not even shopping, while the war was going on?"

Other wild cards include airlines, a huge consumer of fuels, but which have seen a large drop in passengers, and the economy as a whole.

"I keep thinking of retirement-age people, many of whom rely on investments for their income," Ambercrombie said. "People like my dad, who's in his 80s, and has seen his income shrink tremendously in this economy. Will those people be getting out the Winnebagos and driving around?"

Yes, Ambercrombie predicted.

"I would speculate that demand is about to kick in," she said. She guessed that if crude prices continue to fall and demand ratchets up, prices will stay in the vicinity of where they're at now.

"If the commodity isn't being consumed, that's when you get your lower prices," she said. "My guess is it'll be a wash, between lowering crude prices and an increased demand because of people traveling."

Reporter Vince Devlin can be reached at 523-5260 or at vdevlin@missoulian.com

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