Drop in gas prices brings little relief

Drop in gas prices brings little relief

August 23rd, 2011 by Carey O'Neil in News

Victor Jackson pours fuel into his vehicle after running out of gas and rolling to the RaceWay gas station off Rossville Boulevard late Monday morning.

Photo by Dan Henry /Times Free Press.

Samantha Clem's gas-guzzling minivan once seemed like a necessity, but even as fuel prices fall, she's finding the extra space is just too costly.

Clem drives from East Ridge to work at Wendy's in Fort Oglethorpe every day. She said fuel prices haven't fallen fast enough this month and is thinking about getting a tiny car rather than see so much of her paycheck go to pay for gas.

"Ninety-nine-point-nine percent of it goes to gas," she said.

A smaller vehicle will mean less room for four kids, but "I'm just going to squeeze them in," she said.

Clem isn't the only one hurting. Though prices fell from an average $3.58 per gallon at the start of the month to an average $3.46 Monday, some say that 12-cent difference is just a drop in the bucket. U.S. benchmark crude oil prices dropped by nearly 20 percent in that same period, and international prices fell 92 cents to $107.70 a barrel Monday.

"They've come down a bit, but not like they should," said Stan Adamson, a local handyman who wants to see gas prices around $3 per gallon.

Prices could edge closer to that as the civil war in oil-rich Libya dies down with the regime of longtime dictator Moammar Gadhafi in tatters. But University of Tennessee at Chattanooga economics professor and department head Ziad Keilany said people should get used to seeing prices jump around.

"There's a tremendous amount of uncertainty in the market," he said. "We're not going to witness any trend right now."

There didn't seem to be much of a price trend Monday in Chattanooga. The average price for a gallon of regular fuel was $3.46, but costs fluctuated by as much as 28 cents among stations.

The Midnight Oil on Bonny Oaks Drive sold a gallon of regular at $3.56 Monday afternoon. The Favorite Market on Main Street, where Adamson filled up, charged $3.48. Two miles away at the RaceWay on Rossville Boulevard, where Clem lamented the loss of her hard-earned money, prices stayed at $3.28.

"We're very, very busy. On an average, the customer count is two customers per minute, maybe more," said Sagar Dhole, a cashier at the RaceWay. "It's amazing to me. People come from Georgia."

Dhole said competition with the Exxon across the street, which also offered a $3.28 per gallon fill-up, sent prices that low. For the past several days, each station knocked off a few cents to undercut the competition.


Average cost of a gallon of regular gas

  • Monday: $3.46
  • Last week: $3.49
  • Last month: $3.58
  • Last year: $2.54

Source: AAA Fuel Gauge Report

The crowds as well as the frequent price changes have made the last three days "absolutely insane," he said.

Large disparities among station prices are somewhat common. Prices take into account not just the gas supplier's rate but station location, nearby competitors' prices and gas station brand.

But any sort of price slashing is too risky a prospect for some gas stations.

"A lot of retailers are even hesitant to drop prices because the market's so volatile right now," said Jessica Brady, spokeswoman for AAA. "They've started to see [profit] margins open up a bit, but margins have been very tight for retailers."

Brady expects prices to slide lower through Labor Day, but not to anywhere near last year's levels. A year ago, a gallon of gas averaged $2.54 in the Chattanooga area.

"You're not going to see prices just fall down to $2 again, not that drastic," she said.

But with continuing dramatic dips and jumps in the economy, consumers will likely keep seeing the price of gas change.

"It's going to go up and down depending on the uncertainty of economic events," said Keilany, the UTC professor. "We're not quite sure where the economy is going."

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