Falling oil prices could drop gas prices below $2 a gallon in Chattanooga

Gasoline prices in Chattanooga are expected to dip below $2 a gallon again this fall after the busy summertime travel season ends and refiners switch back to less expensive versions of gasoline for the winter.

"Particularly in Tennessee and areas of the Southeast with lower gasoline taxes, we're likely to see a number of gas stations with prices at $2 a gallon or less by this fall," Gregg Laskoski, the Southeast analyst for the online fuel price service GasBuddy.com, said Monday. "We expect you'll see nominal decreases in prices through the remainder of the summer and an even bigger drop in prices once the busy travel season ends by the Labor Day weekend and refiners can switch to the cheaper winter blend of gas."

By the numbers

* $2.36: Average price of a gallon of gas in Chattanooga, down 14.6 cents per gallon from last month and 85.7 cents per gallon less than a year ago* $2.76: Average price of a gallon of gas nationwide, down 3.5 cents per gallon from last month and 81.2 cents per gallon less than a year ago.* $1.87: Average price of a gallon of gas in Chattanooga on Jan. 25 — the lowest price this year* 39.8 cents: Per gallon tax on gas in Tennessee, nearly a dime less than the U.S. average state tax of 48.8 cents per gallonSource: GasBuddy.com

Chattanooga motorists are already getting a cheaper ride from the start of this summer with gas prices down nearly 15 cents a gallon in the past month. A survey of 170 Chattanooga service stations released Monday by GasBuddy.com said the average price of a gallon of regular gas in Chattanooga fell another 3.6 cents per gallon in the past week to an average $2.36 a gallon.

Another price survey by AAA found gas prices in Chattanooga down an average of 4.4 cents per gallon in the past week and 15.3 cents per gallon below the month-ago level.

Chattanooga prices are 40 cents per gallon below the U.S. average and are nearly 86 cents cheaper than this time a year ago, according to both AAA and GasBuddy.com surveys.

The typical Chattanoogan is already saving more than $30 a month in fuel costs from what he or she paid a year ago. If gas prices drop below $2 a gallon, the average motorist could save about $10 more a month.

"Tennessee is an oil consuming, not an oil producing state, so we definitely benefit from cheaper gas prices," said Bill Fox, director of the Center for Business and Economic Research at the University of Tennessee.

Prices at the pump are likely to continue to fall with oil supplies still exceeding demand and the prospect of extra Iranian oil entering the global market if sanction are lifted.

Oil prices fell Monday as the U.S. dollar gained against major currencies, briefly dropping the price of crude oil below $50 a barrel for the first time in more than three months.

Light, sweet crude for August delivery closed Monday down 74 cents per barrel, or 1.5 percent, to $50.15 a barrel on the New York Mercantile Exchange. That's the lowest closing price since April 2.

Brent, the global benchmark, fell 45 cents per barrel to $56.65 a barrel on ICE Futures Europe.

Oil prices reached a 6-year low in March, but rallied this spring on expectations that the summer driving season and cuts in U.S. oil drilling would lead to lower supplies. But output from the U.S. and other nations has remained robust, and prices have dropped in the past month.

"There's a lot of crude around, period. That's what's underlying all of this," Elaine Levin, president of energy brokerage Powerhouse, told the Wall Street Journal Monday.

Patrick DeHaan, GasBuddy senior petroleum analyst, said gas prices "will be coming back" to some of the lows reached last winter by the fourth quarter. In Tennessee, which has a state gas tax rate about 10 cents per gallon below the U.S. average, average gas prices fell as low as $1.87 per gallon in late January before rising over most of the next five months.

"With oil nearing $50 per barrel, there's a very good possibility that by mid-fall, gasoline prices could fall under $2 a gallon in a growing number of states," DeHaan said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.

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Chattanooga Gas Prices provided by GasBuddy.com