Gasoline prices below $3 gallon south of CowetaBy SARAH FAY CAMPBELL
Gasoline prices have been steadily dropping since April, and analysts are expecting even more significant decreases.
Prices could soon dip below $3 for a gallon of regular unleaded in Newnan.
According to Gasbuddy.com , stations are offering regular unleaded for $2.79 in Hinesville, near the Georgia coast, and for $2.86 in Macon. Regular unleaded is $2.84 in Auburn, Ala.
In Coweta, regular unleaded could be had for $3.12 at several stations along Bullsboro Drive on Friday.
The Georgia state average for regular unleaded was $3.154 on Friday, according to AAA’s Fuelgaugereport.com website. That’s down from $3.24 a week ago, and $3.386 a month ago.
Though declining gasoline prices is good news, the reason for them is not.
“Oil prices dropped below $80 a barrel last week for the first time in almost 10 months after reports forecasted a continued bleak economic outlook,” said Jessica Brady with AAA, The Auto Club Group.
“The U.S. Energy Department forecast that oil demand in the U.S. and Europe will fall for the second year in a row after the first half of 2012 reflected slower growth than initially expected,” Brady said.
The fundamentals of supply and demand are definitely working in consumers’ favor.
“Oil stockpiles are at their highest level in 22 years and increased by 2.9 million barrels last week to 387 million barrels,” Brady said.
And U.S. oil production is at 7.84 million barrels per day, its highest level in 14 years, said Gregg Laskoski, analyst with Gasbuddy.com .
“Oil production right now is exceeding consumer demand all over the world,” said Laskoski. “That is one of the reasons we are seeing the prices we see now.”
The European Union plans to increase sanctions on Iran starting July 1, but Laskoski doesn’t see that, in itself, as being a big driver for oil prices. If the Iranian situation results in military conflict, though, that is a different story.
“There is nothing on the horizon that we can say right now would prompt an uptick in fuel consumption,” he said. “In the U.S., the department of labor data that we have seen for the last three months has shown job figures that are so disappointing that there is simply no reason to think there is going to be an increase in fuel consumption.”
Another factor in the lower oil and gasoline prices is the strength of the U.S. dollar.
“When we saw the run up in 2008 and gas prices hit record highs, one of the things that was driving that was the weakness of the dollar,” Laskoski said.
Right now, the dollar is actually stronger, “but only in relation to the other world currencies,” Laskoski said. “It’s not that the economy is actually stronger, it’s that the other currencies, like the Euro, are doing so badly that it makes the U.S. dollar look better,” he said.
Because of that, investors aren’t pumping their money into commodities, such as oil and gold, as a hedge against the dollar.
“So barring some kind of major event in the Middle East or a major weather event that impacts the Gulf and oil infrastructureâ ¦ we still anticipate that fuel prices are going to decline significantly,” Laskoski said.