For the first time in nearly two years, gasoline prices have fallen below their year-ago levels.
The average price of regular gas in Chattanooga declined 11.2 cents a gallon in the past week to drop to its lowest level since January. Chattanooga's average price of $2.86 a gallon for regular fuel Monday was down by more than 30 cents a gallon from a month ago and was down about 11 cents a gallon from a year ago, according to GasBuddy's survey of 170 stations in Chattanooga.
Since average gas costs peaked in Chattanooga in June at $4.56 a gallon, prices paid at the pump for most motorists have dropped by more than 27% in Chattanooga. A decade ago, Chattanooga gas prices averaged $3.14 a gallon, which adjusted for inflation would be more than 30% above the current level.
Chattanooga gas prices remain 50 cents a gallon below the U.S. average price even after U.S. fuel prices fell by nearly 16 cents a gallon over the past week.
"For the first time in 670 days, the national average price of gasoline has fallen below its year-ago level, dropping for the fourth straight week to its lowest level since January," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a report Monday. "It remains very possible the national average could fall under $3 per gallon by Christmas."
American consumers save an estimated $1.18 billion for every penny-per-gallon decline in gasoline prices due to cheaper refueling of their own cars and lower costs for transportation of products they buy.
Truckers relying on diesel fuel also are getting a price break at the pump with average prices falling below $5 a gallon nationwide "and could soon fall to their lowest level since March," De Haan said.
Across Tennessee, surveys by the AAA MidSouth Auto Club found the average price of gas in Tennessee fell below $3 per gallon over the weekend for the first time since Jan. 4 with the statewide average now at $2.98 a gallon, or 30 cents cheaper than a month ago.
"We're now seeing gas prices at 11-month lows in Tennessee thanks to low oil prices and strong gasoline supplies," Megan Cooper, a spokeswoman for AAA, said in a report Monday. "We can still expect to see fluctuating gas prices across the state as gas prices begin to normalize after recent drops in crude oil pricing. Barring any big market changes, it's likely that Tennesseans will continue to see prices trend downward again this week."
Despite all the good news about fuel prices, there may be some concerns as the price cap on Russian oil kicks in. In the most far-reaching efforts so far to target one of Moscow's main sources of income, the European Union on Monday began banning most Russian oil and the Group of Seven democracies has imposed a price cap of $60 per barrel on Russian exports to other countries.
The effect of both measures, however, may be blunted because the world's No. 2 oil producer has so far been able to reroute much of its European seaborne shipments to China, India and Turkey, although at steep discounts, and the price cap is near what Russian oil already cost.
Chris Weafer, CEO and Russian economy analyst at consulting firm Macro-Advisory, told The Associated Press "the outlook really doesn't change much."
"But what is key is how much volume Russia would be able to sell," he said. "And that depends not only on the willingness of Asian buyers to continue buying Russian oil, but also what is the physical ability of Russia to shift that oil."
In trading Monday, oil prices fell more than 3%, following U.S. stock markets trading lower. Brent crude futures settled down $2.89, or 3.4%, at $82.68 a barrel. West Texas Intermediate crude fell $3.05, or 3.8%, to $76.93 a barrel. Both benchmarks had earlier risen more than $2, before reversing direction.
"Macro-economic jitters about the Fed and what they're going to do on interest rates are taking over the market," Phil Flynn, an analyst at Price Futures group, told Reuters news service.
In the Chattanooga area, the cheapest fuel was available south of the state border in Fort Oglethorpe and Rossville, Georgia, where fuel was priced below $2.50 at a number of stations, including a Save A Ton station in Fort Oglethorpe that was selling regular gas Monday at 2.46 a gallon, according to GasBuddy.com
Gasoline is cheaper in Georgia, in part, because Gov. Brian Kemp has six times extended the suspension of the state's motor fuel tax. The state tax exemption is due to expire Sunday.
The Associated Press contributed to this report.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340. Follow him on Twitter @DFlessner1.