Gas prices to dip below $3 per gallon by fall, experts predict

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Sign showing gas prices in front of Sheetz in Mt. Jackson, Virginia, on August 31, 2005, just as Hurricane Katrina began to make its mark on the price of gasoline. Prices had risen thirty cents since the previous day, and would rise an additional twenty cents before the day was over. Photo by Ben Schumin.

Gas prices under $3 per gallon? We'll be there again soon, experts claim. (Photo Credit: CC BY-SA/SchuminWeb/Wikipedia)

Gas prices in our recessionary age continue to make consumer see red, such is the expense of operating the internal combustion engines that spin the wheels of commerce and leisure. However, experts are now predicting that an economic respite is headed our way. The Detroit Free Press reports that fuel costs will likely drop below $3 per gallon by the onset of fall 2012.

Welcome respite after rough April

Consumers will no doubt welcome any break in the sky-high gas prices, particularly after numerous states including Michigan rocketed above $4 per gallon for petroleum fuel in April 2012. The trend toward lower fuel prices is beginning to become a reality in many areas of the U.S.

“It’s going to become a national trend very soon, because oil has dropped below $80 a barrel,” said Oil Price Information Service executive director Denton Cinquegrana. “All things being equal, and we don’t see anything major happening over the next couple weeks, I wouldn’t be surprised to see prices drop even more.”

National average is down

Considering the current average fuel price per gallon, it may very well take a few months before gas price hit sub-$3 per gallon levels. As of Friday, the national average was $3.45, two cents lower than the previous day, and 22 lower than the May average, according to the AAA Daily Fuel Gauge Report. Last year at this time, the average national price for gasoline was $3.62 per gallon. In the “Motor City” of Detroit, the average fuel price was $3.64 per gallon last Friday, three cents lower than Thursday and 20 cents lower than the previous week’s high.

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A tax break, of a kind

Why is the price of gasoline on the decline? According to Cinquegrana, conflict in the Middle East has lessened somewhat of late, oil refineries have completed the changeover to summer blends and other refinery maintenance projects are also complete. In addition, economic upheaval in Europe and China have deflected investor tension away from the oil market, at least to some extent.

“You have a little bit of a double-edged sword,” said Cinquegrana. “Lower gas prices are good for Main Street. It’s like your own little tax break.”

Not as good as you think

Wall Street pundits point out that the projected drop in gas prices below $3 per gallon is not an indication that the U.S. economy is on the right track. Weaker demand leads to drops in oil and commodity prices, which stems from lack of consumer confidence. Gasoline retailers, however, are happy to take advantage of the chance to sell more.

“As retailers, yeah, we’d like it lower,” said Ed Weglarz of the Associated Food & Petroleum Dealers.

By selling more, however, Weglarz doesn’t necessarily mean more gasoline. Retail arrangements net the same few cents per gallon for retailers, but the money consumers save is much more likely to be spend on concessions, car washes and other items.

Gas below $3 per gallon? It’s happening


Detroit Free Press

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