Chattanooga: Gas prices drop almost half in year

Lori Wilkerson remembers 2004 well because her husband was in Iraq.

“He was freaking out because I was spending so much money on gas,” she said, acknowledging that regular unleaded had climbed to about $2.50 a gallon at the time.

Since then, the average retail price for gas climbed to almost $4 a gallon, but it recently has dropped to about $1.50.

Ms. Wilkerson, 39, a Winchester, Tenn., resident, filled up Monday at Kamboi Exxon on East 23rd Street where regular unleaded was $1.49 a gallon. She said she doesn’t want to see the price increase again.

“I think if it can be this low now, there should be no reason for it to go back up,” she said.

Gregg Laskoski, a gasoline analyst for AAA Motor Club South, said the weak economy is driving prices down, and motorists are likely to see prices fall further.

The retail price of gasoline is determined predominantly by the cost of crude oil on the New York Merchantile Exchange, he said. Last week, the price of light, sweet crude closed at about $40 a barrel, but it was trading Monday as high as $43 a barrel.

But Mr. Laskoski assured motorists that the recent increase won’t have an immediate impact on the pump price.

“Because the price is dropping so quickly, the price at the pump now does not reflect the drop in crude oil we saw last week,” he said. “Having said that, I’m not sure how low things are going to go. No one can be.”

Some analysts are predicting crude oil could fall to around $30 a barrel, while gasoline could go as low as $1 a gallon.

“I think that may be possible, but I’m not sure that it is likely,” Mr. Laskoski said. “We like to say that for every $10 of movement in the price per barrel, that usually equates to about 25 cents a gallon in the price at the pump.”

Analysts said the falling price of oil is the result of the weak global economic situation.

Steve Ray, owner of Steve Ray’s Midnite Oil in Ooltewah, said he watches the oil futures prices closely and was selling regular unleaded for $1.39 a gallon on Monday.

He said he expects oil prices to fluctuate between $45 and $35 before falling further after the first of the year.

“I think it could go even lower in January and February,” he said. “I don’t think it will hit $1.”

Mr. Ray said he will celebrate 25 years in business on Christmas Eve. During the last quarter-century, he has seen economic shifts that have impacted the price of gas, but he never has seen it like this, he said.

“The last real rough one I remember was in 1993,” he said. “But I’ve never seen it this bad before.”

Tom Kloza, an analyst with the Oil Price Information Service, believes the $40-a-barrel mark is as low as crude is likely to go.

Mr. Laskoski said the slight rise in the price of crude could signal the bottom is near, but that’s hard to predict.

“We may be near the bottom, but things could continue to drop,” he said.

FALLING PRICES

Below is a list of the changing prices of regular unleaded gasoline.

Tennessee Georgia Alabama United States

Monday 1.576 1.647 1.648 1.716

Sunday 1.601 1.671 1.669 1.733

A month ago 2.164 2.141 2.259 2.282

A year ago 2.915 2.946 2.926 3.008

Source: AAA Fuel Gauge Report