Financial crisis creates some good news: Gas prices decline

The bad news: the economy, home prices, stocks and employment rates are falling.

The good news: gas prices are, too.

In Hampton Roads, the average price per gallon of regular gas fell to $3.29 Friday, according to auto club AAA’s Fuel Gauge Report. That’s down more than 60 cents from June’s peak of nearly $4 per gallon and about 40 cents from right after Hurricane Ike hit the Gulf Coast a month ago.

Some local stations posted prices as low as $2.96 Friday.

“It’s a relief,” said Ashley Jones, an Old Dominion University student, as she bought gas at the Miller Mart Shell station on Hampton Boulevard near the school. She said she relies on savings from her summer job to support her throughout the school year, and the money doesn’t go as far when gas prices are high.

The national average fell to $3.35 a gallon for regular and oil prices dropped to below $80 per barrel, the lowest price in a year.

Energy experts said the economy is largely responsible.

“With the financial crisis and the doom and gloom across the globe, what we’re finding is, demand is really lower,” said Ben McClenahan, general sales and marketing manager for Papco Oil Co., which supplies about 100 stations in the region.

Unemployment also is contributing to low demand, which drives down prices, said Mary Novak, managing director of energy services for Global Insight, an economic forecasting firm.

“You spend a tremendous amount of gasoline going to work,” Novak said. “With fewer people working, you have less demand for oil.”

The decline is one bit of good news for consumers, hit hard by higher prices in stores, job losses and other economic fallout.

Gas prices began dropping in July, but spiked again last month when hurricanes disrupted production at Gulf Coast oil refineries. In Hampton Roads, that caused some gas shortages and prices rose above $3.70 per gallon.

At Miller Oil Co., which operates more than 30 local gas stations, the shortages meant it only received about 70 percent of its usual gas shipments from some suppliers, said Jeff Miller, the Norfolk-based company’s president. But shipments returned to 100 percent this week, he said. “That has taken some of the pressure off.”

Gas prices should continue to fall over the next few weeks, and will likely bottom out as the stock market hits a low mark as well, energy experts predicted.

“Short of the stock market making a strong recovery, I think we’re going to see some low prices here for a while,” Miller said. “Demand is going to continue to be off.”

In the meantime, drivers are enjoying the relief.

“I’m thrilled,” said Joel Rubin, who owns a public relations firm in Virginia Beach, as he filled up at the Exxon station on Virginia Beach Boulevard . “When I saw it, I said, 'I’m going to fill up right now.’”

Kathy Adams, (757) 446-2583, kathy.adams@pilotonline.com