Gas Prices Below $2 in plezWorld

Running around town over the weekend, plezWorld was shocked when I started seeing consistent gasoline prices under $2 per gallon. Less than 2 months ago, people in metro Atlanta were suffering through a 3 week gasoline shortage that was exacerbated by $4 per gallon gasoline (for regular). Today, premium was at $1.999... prices haven't been this low in over 2 years.

The gasoline prices have followed the $150 per barrel oil that has recently dipped to just below $50 per barrel!

No complaints here, but one has to wonder what is driving the drastic price drop and volatility in the price over the past 2 months. Demand has certainly dropped, plezWorld has tried to conserve as much as possible. And it is quite possible that the worldwide recession has decreased demand, as well.

An article in CNN.com reports that the average price of self-serve, unleaded gasoline on Friday in the United States was $1.97, said Trilby Lundberg, publisher of the Lundberg Survey. The last time the price was below $2 was on March 4, 2005, she said. The all-time high average was $4.11, set on July 11, according to Lundberg, and prices have been dropping ever since.

Lundberg attributed the price reductions to a drop in crude oil prices and demand, and also because of low refining margins.

"Crude oil remains [the] main driver," for the decline, she said, noting that crude oil futures settled on Friday below $50.

Demand is always low in November, she said, but the weakening economy is reducing it further. However, Lundberg said that if crude oil prices do not fall further, "then the end of this [gasoline] price crash is either here or near." The Lundberg Survey is based on responses from more than 5,000 service stations nationwide.

An article from the Atlanta Journal-Constitution cites the weakening economy for the price drop. The article states that The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched. That likely means fewer vehicle miles driven, both because of job losses and less trips to the shopping mall and less money spent on vacations. Businesses are slowing down as consumption drags.

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plez sez: there are hopes that home heating costs will drop along with the gasoline prices.

and there are hopes that demand will not increase dramatically with the lower prices. there are some who will abandon their conservation efforts now that it costs less than half of what it did only six weeks ago to fill up.

it appears that holiday shopping and travel will be way down from last year. i know that plezWorld is buying fewer christmas presents this year and there won't be any interstate travel until the new year... we're driving up to washington, dc for the Obama inauguration! it'll be a lot easier on the family budget to fill up the suv at $2 per gallon as opposed to $4 per gallon!

~ ~ Citations ~ ~

Read the Atlanta Journal-Constitution article about lower gas prices in Georgia.

Read the CNN.com article about $2 per gallon gasoline around the US.

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