Gasoline prices continue decline, go below $3

John Petrovic/The Olathe News

Joe Foster filled up his gas tank Thursday at 7-Eleven, 802 W. Hwy. 56, with regular unleaded for 2.84.

Contact John Petrovic at 764-2211, ext. 129 for reprints.

Some Olathe residents were surprised to see gasoline dip below $3 a gallon last week, but they didn’t seem to mind.

According to the American Automobile Association’s (AAA) Daily Fuel Gauge Report Thursday, Kansas had the country’s second least expensive gallon of regular unleaded gasoline at $3.03 – far lower than the $3.40 national average.

But in Olathe, several stations were selling gas for less than $3 a gallon, including 7-Eleven, 802 W. U.S. Highway 56. Its prices started at $2.84.

“Just as I was pulling in, I was thinking about going home to get my truck to fill up,” Olathe resident Joe Foster said of switching out his Mazda Protege for his gas-guzzling GMC Sierra extended cab. “How long it lasts, no one really knows.”

An employee of the station said demand was so high Wednesday when the price was seven cents higher, they ran out of regular unleaded that evening.

Analysts say, as the financial crisis stretches overseas, the demand for oil has declined resulting in lower prices. Light, sweet crude fell below $90 last week and held steady, it’s lowest price in more than eight months. Crude peaked at $147.27 July 11, the day gas hit an all-time high for a gallon of regular unleaded at $4.11 .

It’s kind of a good news, bad news situation, said Tancred Lidderdale, a senior economist for the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy.

“Lower prices are coming at the expense of a worsening economic outlook,” he said.

Lidderdale said how low prices go may be best determined by the cost of crude and regular unleaded at the same time last year. They were $85.80 and $2.80, respectively, on Oct. 9, 2007.

In his latest blog post published Monday, Tom Kloza, chief analyst for the Oil Price Information Service in Wall, NJ, wrote that this month, gas prices will decline year to year for the first time since 2006.

At some point in October, he wrote, consumers will pay less for gas than they did the same day in 2007. Kloza wrote that regular unleaded at $3 or less will be commonplace in the coming weeks.

“But these cheaper prices come at a steep price, and we shouldn’t be delusional about the prospects for considerably higher prices in 2009 or 2010 or beyond,” he wrote. “The world hasn’t lost its appetite for oil -– it’s a bit bulimic.”

Olathe residents Thursday afternoon showed up in droves at the 7-Eleven on 56 highway to fill up.

It didn’t cost resident Jeanne Gregory $60 to $70 to fill her tank Thursday, something that hasn’t happened for a while.

Resident David King said: “I’m just glad to see gas prices go down.”

Faisal Asad, who owns the 7-Eleven with his brother, said he hopes prices continue to fall, which could help the economy if everyone has more discretionary income.

“High gas prices hurt everyone,” he said.

Lidderdale used the recent peril on Wall Street as an example to how quickly things can change. On Thurday, the Dow Jones Industrial Average plummeted seven percent to it’s lowest point in five years.

He said it’s yet to be seen the Organization of the Oil Producing Countries (OPEC), which controls 40 percent of the world’s oil supply, will respond. OPEC announced Thursday it will hold an emergency meeting next month to possibly cut production to stop the oil price free-fall.

The EIA’s weekly short-term energy outlook, published Wednesday, projected the cost of crude to at about $112 per barrel for the rest of the year and in 2009. It projected the average cost for regular unleaded at $3.56.

Lidderdale said it will likely take time and he wouldn’t predict how long to see how Congress’ $700 billion bailout affects economic growth, which could change EIA’s forecasts.

“We’re in a very uncertain period,” he said.

On Friday, the national average for the price of regular unleaded dropped another 5 cents to $3.35, according to AAA. The price fell in Kansas to $2.97.

In Kloza’s blog, he predicted gas prices would dip below $3 a gallon by the weekend in several states including, but not limited to Texas, Arkansas, Oklahoma, Delaware, Missouri, Kansas, and New Jersey. So far, he’s right in Kansas, Missouri and Oklahoma, which has the lowest priced gas in the country. And it’s only Friday.

Foster said he expects gasoline prices to rise again when the economy bounces back. Until then, he said he’ll take advantage of the savings.

“You’ve got to enjoy it while you can,” he said.