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Consumers have become accustomed to seeing gas prices on the move, but that move is usually up instead of down. Lately, however, as oil prices have dropped to around $80 per barrel, gas has also dropped, and for the first time in as much as a year, local gas prices have fallen below $3 per gallon.
Local merchants selling gas say it’s a simple case of supply and demand. Greg Simms, owner of the BP station on Lincoln Park Road in Springfield, said he has seen demand for gas dropping in recent months.
“It’s all demand driven,” Simms said. “I think the demand for gas has been going down 4 or 5 percent a month. It’s just basic economics, supply and demand. There was a break when the hurricanes hit, and that shut down the whole refining complex, which is basically where all of our gas is coming from. They’ve all recovered now and are back up and running.”
Simms said he has been following the prices of oil, which are linked directly to gas prices, and he has seen them go as low as $80 per barrel as of last week. Also, on Friday, he estimated that gas could drop below $3 per gallon within the week, but that prediction took much less time. By Saturday, local retailers were selling gas at $2.99 per gallon.
“There are daily drops in price, and we’re passing it along,” said Keith Schlosser, owner of the BP station on Main Street in Springfield. “Oil prices were as high as $142 per barrel, and it’s now around $80. It’s got nowhere to go but down. In my experience in the last month and a half, you could see it drop 13 cents one day and be back up 15 cents the next. It’s very sporadic.”
Simms said he usually gets two deliveries of gas per week, with each bringing 8,500 gallons of gas to his station.
“Lately, it’s not unusual to see prices move 20 cents in a day,” Simms said. “The stations in bigger cities get deliveries every day, but here we get two loads a week. If you bought gas, then the price drops, you have to drop prices, and you could be losing money.”
Simms said he has not seen consumption rising since prices have started to drop, and he doesn’t expect to see it change. He said with the economy as weak as it is, this could be a tough winter for people. Schlosser said he noticed gas sales start to decrease as prices climbed closer to $4 earlier in the year.
Bobby Haydon, bulk plant manager for Haydon Oil in Springfield, said he speculates that the decreasing prices could be related to politics and the upcoming election. He also pointed to supply and demand, and the reduced consumption by many drivers.
“One of the reasons people stopped driving so much is that gas was so high, and that creates a glut when there’s a bunch of gas on hand, and it’s supply and demand just like any other market,” Haydon said. “From what I understand, OPEC (Organization of the Petroleum Exporting Countries) is going to have an emergency meeting, and they’re probably going to cut back production so many hundred thousand barrels a day to drive the market. I don’t know if it will keep going down, but if the prices of crude oil keep going down, gas will probably keep going down, too.”
Haydon said his company supplies some stations and owns others in and around Springfield and neighboring communities. He said with the economy struggling, he still doesn’t expect people to do a lot more driving due to the lower prices. Instead, he said he expects consumers to “hunker down” and see what happens before making any major changes to their driving habits.
“Usually, this is not a big time for gas sales anyway,” he said. “In my opinion, the farmers are doing a lot of work, and it’s in between heating oil time, so there’s just not a lot being used. Summer’s over and the kids are back in school and aren’t driving as much, so consumption is down, and that’s helping the prices go down. I think the falling prices will help people feel a little better about taking a trip or going shopping in Louisville or something like that.”
For more on area gas prices, visit www.kentuckygasprices.com on the Internet.