The Virginian-Pilot
©
Four short months after prices topped four bucks a gallon and seemed hell-bound for five, gasoline is cheap and getting more so by the day: The national average price has dropped below $2 to its lowest point since January 2005, and regular is going for less than $1.60 at several local filling stations.
The cheapest local price for regular appeared to be about $1.53 a gallon Tuesday - the cash price at the Texaco station on Indian River Road in Virginia Beach. A Wawa and a neighboring Wilco station on South Rosemont Road were dueling at $1.55.
A quick primer on the phenomenon:
Why is this happening?
"The Economics 101 answer is that it's primarily demand-driven," said Christopher Colburn, chairman of Old Dominion University's economics program.
Economies all over the world are in recession, which translates into less building, less bustle, less business - and a lower demand for motor fuels and electricity. Americans are driving and spending less, of course, but the economic cool-downs in China and India probably have more pronounced effects.
So is this good news or bad?
It's a mixed bag. Lower prices are good news for cash-strapped consumers worried about winter heating bills and commuting costs. But they could take the fire out of efforts to wean the country from its dependence on oil. "Our willingness to search for alternative fuels goes up when the price is high," Colburn said, "but goes down when the price drops - which makes us even more dependent" on foreign sources.
And remember, the price of gas is falling because the world's economy is gut-shot. It may feel good to fill the tank, but that lower price is an index of just how bad things are.
How low will prices go?
Maybe a little lower, but Ben F. McClenahan, general sales and marketing manager for Virginia Beach-based Papco Oil, figures that they have to be nearing their bottom. A fill-up already borders on the surreal: The national average was $1.95 a gallon Monday, according to the Department of Energy, down almost a dollar from a month ago and well less than half of July's $4.16 peak. Locally, at least one retailer has busted the $1.50 plateau: Chesapeake's Greenbrier BP had a $1.49 special Saturday.
Will prices go back up?
Almost certainly.
"When the economy does begin to pick back up, there could be a rapid rise in the price of oil again," Colburn said. "You would not necessarily want to buy an SUV right now."
The turnaround's timing depends on economic recovery here and abroad, McClenahan said: "Is this going to be a long, protracted recession? If so, then it could be a while before it comes back."
But to a lesser extent, it also could be affected by a hard winter, which would drive up demand for heating oil, and by changes in the worldwide oil supply - a production cut by OPEC, for instance.
Earl Swift, (757) 446-2352, earl.swift@pilotonline.com
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Give Bush his day in court
Afraid he'll go to jail?
You Bushies crack me up.
You Bushies crack me up. You're already blaming Obama and he hasn't even been sworn it yet. At least Obama seems to want to take a stance and make a change. Tell me one thing Bush has done in the past 8 years that was good for the entire country and not just the "Fat Cats" that were already well off. Whoever coined the term "Lame Duck" sure got the "Lame" part right.
Rid ourselves of the baggage he created in the Middle East, bring our troops home, and keep our money in the U.S. so we can fix the problems we face.
The $4 per gallon gas hurts
The $4 per gallon gas hurts my wallet big time!
I try not to drive around as mutch as I used to.
I mainly drive to & from work, thats it.
Windshield Repair
Cox Cable is the real
Cox Cable is the real culprit. Thye increased our bills for fuel charges when they are idiotic and directionless. It took 4 visits from them to attach in a wire. All the while my screen pixelates. They handed us an increase for poor management and even poorer communication. Their management plan is to keep enough buckets bailing water out of the boat but never fixing the leak. Did I mention their union labor costs? Open up these markets to competition!
Checks and Balances
I want my refund from Dominion! Spike my rates for no reason! The futures morons spiked the price of gas and look at our economy now. Although my company is having record months, so no econonic downturn for me. Now I better not see no bailout of the irresponsible homeowners, so we can keep gas right where it is and should be. Obama, freeze the price of gas to keep the rich from getting richer and help us middle class out.
TR; please cite your source!
"The adjusting/bankrupting markets are putting hundreds of thousands of people out of their jobs and out of their homes."
Please provide your source for the "hundreds of thousands" you say have lost their jobs and homes. Also, from what date have these "hundreds of thousands" of people become jobless and homeless? If they’ve lost their jobs and homes in the last 6 months, for example, that's pretty alarming!
If your numbers are true, I hadn’t realized the enormity of the problem, because I haven’t seen these stats anywhere! Neither have I seen news stories about a sudden increase in families living in shelters, or parks, or lining up at charity kitchens. I think if “hundreds of thousands” of Americans had recently lost their homes, I’d be seeing evidence of that somewhere. I mean, where did all these unfortunate people go?
History cannot be denied - it's there for all to see
To those that like to Bush-bash, have at it. Though I proudly voted for him in both elections to avoid more left-wing big government and endless social programs, I certainly don't think he was a strong president. But to those of you that like to "point out Bush's failed economic policies", get a clue! The president doesn't have that power.
Instead of spewing soundbites from ABC, NBC, CBS, MSNBC, CNN, Headline News, and the Nobama campaign, study your history. Study the make-up of the US Congress over the last 50-100 years and the laws it passed, study the history of corporate regulation and see that the tighter controls get, the less companies are able to compete nationally and globally, study our financial system and Federal Reserve to understand why our markets act and react the way they do, and study the trends in global competition, education, and compensation. Do that before you type again and look more foolish.
Economies run in cycles and downturns are inevitable, so are failed business models. Government control is NOT the answer to correcting our markets. More gov't control (and more handouts I'm sure) will mean less ability to compete and survive, since it rew
we knew from the beginning
We were told via countless information platforms (for those that take "real" interest) that the gas prices were overblown and had no rhime or reason for spiking, and that they would correct themselves. Well here we are. Same medicine with the housing & banking markets. Congress (democratic majority and Barney Frank) was told this a little over two years ago after winning the majority, but they didn't want to "educate" or cut off the easy mortgages to their constituency and deal with Fannie Mae avoiding this debacle. So here we are and the political machines immediately scream it's Bush's fault despite the statistically overwhelming success between 2001 - 2007. This is solely congress' fault and could've been avoided had they LISTENED to Bush. Americans, we think we know so much, but it's scary how little we know and how easy we are manipulated by the "paid for" media propaganda and political campaign machines. Me I'm doing just fine and only find the gas prices a temprorary annoyance, while watching the greedy flounder with thier overpriced, overfinanced, oversized homes and mortgages. I see it as a free society. Free to succeed. Free to fail. Free to live. Free to die. God bless
Re: Getting it right's comment
"We are headed for trouble folks... Hope those that voted for Obama like Socialism (a failed economic and government system), because it's coming in spades! $4/gal fuel (if you can get it) will seem like a dream by the time it's over"
Here we go again with yet another conspiracy theorists'viewpoint! It was only a matter of time! Yup, I proudly voted for Obama, and if you really think that we are headed for a true Socalist government, then I've got a bridge to sell you, in some nice swampland. Can you prove that gas will go beyond $4/gal without resorting to some old tired internet/email rumors, claims, speculation? If there was any failed economic and government system, it was due to the 8 years that Bush was in charge. And think about this for a moment: Obama has one big mess on his hands to clean up. And if you listened to any of his speeches, he made it perfectly clear that it won't be easy and that it may take some time. If you think you can do a better job, then by all means, run for local office, the Senate, Governorship, and/or the Presidency. Let's see if you can do better!
Enjoy it while it lasts
OPEC will be cutting oil production by 1.5M bpd.