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Relief at the pump: Gas prices dropping

But why now?

POSTED: October 19, 2008 5:01 a.m.
TOM REED/The Times

Akbar Dhannani changes the gas price to $2.99 at his Chevron convenience store on Thompson Bridge Road Wednesday.

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The average price of gasoline in Georgia dropped to $3.17 Wednesday, a welcome relief for motorists who have endured recent spells of high prices and short supplies.

Georgia’s average price fell 7 cents in one day, down from $3.24 Tuesday.

In Gainesville, gas prices already have dipped below $3 a gallon at some stations.

"Crude oil has come down dramatically," said Gregg Laskoski, a spokesman for AAA Auto Club South. "In July, crude oil peaked at $147 a barrel. Today, crude oil is trading on the New York Mercantile Exchange at just slightly over $75 a barrel."

The national average price of regular unleaded gasoline is $3.12 a gallon, down from $3.16 on Tuesday. A month ago, gas averaged $3.84 a gallon; a year ago, it was $2.75.

Laskoski predicts prices will continue to drop, and likely will drop to near where they were last year.

"All of these conditions point to continuing decreases in the retail price of gasoline. And we could see this continue through much of the fourth quarter," Laskoski said. "It may not be surprising if we see gasoline get down to $2.75 or even $2.50 a gallon."

Laskoski said there are a number of reasons why gasoline prices are dropping so fast.

"I’d say that the bull market for crude oil ended in July because what we saw after that was the dollar started to make some gains against other currencies. Because of that, the attraction of
commodities markets and crude oil for investors was diminishing," Laskoski said.

He said speculative investing had a lot to do with the high price of oil. Now that investors are pulling money out, prices are dropping.

And after high prices all year, people have made a habit of using less gasoline, and likely will continue to do so to save money.

"People got very cost conscious when gasoline was at $4 a gallon. And I think we’re still very cost conscious, because even though the cost of gasoline has come down, people know what’s happened in the financial markets, know what’s happened in the banking industry, and they’re very fearful," Laskoski said. "I think they’re grateful to see the prices coming down, but they’re still going to be as cautious and conservative in their driving habits as they have been this year."

Supply and demand is also working in consumers’ favor.

"The Department of Energy reports that our nation’s supply of both crude oil and gasoline is very healthy right now. But at the same time, consumer demand is relatively flat," Laskoski said.

The price drop comes after fuel supplies in North Georgia and elsewhere in the Southeast were interrupted in late September. Refineries were shut down by Gulf Coast hurricanes, leading to some dry pumps and long lines at area stations for a few weeks.



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