Retail gasoline prices may have hit highest level of the summer over July 4th weekend

Pump prices head down again after holiday weekend

Drivers are finding lower gas pump prices now that the July 4th weekend is over and prices are likely to keep sliding.

The national average for retail gasoline prices was $2.724 a gallon, 2.6 cents less than it was on Friday as the holiday weekend began, according to AAA, Wright Express and Oil Price Information Service. The pump price is 11.3 cents more than a year ago but about the same as a month ago.

The government’s Energy Information Administration said Tuesday afternoon that the price of a gallon of unleaded regular averaged $2.726 on Monday, down three cents from a week before. California drivers still had the highest pump prices in the country at an average of almost $3.12 a gallon. Motorists in the Gulf Coast states paid $2.58 a gallon.

Predictions of a national average of $3 a gallon faded weeks ago because supplies remain above a five-year average and demand is tepid as consumers worry about jobs and the strength of the economic recovery.

Analysts think gasoline prices will bounce a bit between now and Labor Day but will not jump significantly.

“I think right now, we’ve probably seen the peak for the summer. We’re probably going to start heading back down again,” PFGBest analyst Phil Flynn said.

Oil prices fell again Tuesday for the seventh straight session after rising as high as $73.86 earlier in the day. Oil initially followed stocks higher, but fell back as Wall Street gave up some ground.

The Dow Jones Industrial Average rose 57.14 points to close at 9743.62, after rising almost 200 points earlier in the session. The NASDAQ and the S&P 500 closed slightly higher as well.

Benchmark crude for August delivery fell 16 cents to settle at $71.98 a barrel on the New York Mercantile Exchange.

Some analysts are slashing oil price projections despite stronger crude demand in emerging economies. Barclays cut its forecast for the average oil price in the fourth quarter to $87 a barrel from a previous estimate of $92 and lowered its prediction for 2011 to $92 from $97.

Others are more optimistic.

“For the moment, despite the growth jitters, it seems to us that both the U.S. and the global recovery will remain intact, and although growth seems to have clearly downshifted a gear or two, we are not looking for a double-dip,” MF Global analyst Edward Meir said. He added that he would be surprised if oil prices stayed below $70 for a considerable period.

In other Nymex trading, heating oil rose 0.17 cent to settle at $1.9172 a gallon, natural gas lost half a cent to settle at $4.682 per 1,000 cubic feet and gasoline fell 0.64 cent to settle at $1.9713 a gallon.

In London, Brent crude lost 2 cents to settle at $71.45 a barrel on the ICE Futures exchange.

Associated Press writers Alex Kennedy in Singapore and Pablo Gorondi in Hungary contributed to this report.