Motorists are enjoying gasoline prices less than $2 for a gallon of unleaded at some stations in the Lenoir City area, the lowest level in six years across the nation.
But local gas analysts have said residents should not expect prices to stay so low for much longer.
As refineries switch in March or April to a summer blend of gasoline that is more difficult to refine and consequently tends to be more expensive, experts said the price could rise, but not go as high as this past summer when gas prices approached $3.50 per gallon for unleaded.
Gas prices Monday in Lenoir City were recorded as low as $1.95 at the Shell gas station at Dixie Lee Junction and $1.99 at Red Top Market at U.S. Highway 11 and Leeper Parkway, according to GasBuddy.com.
Don Lindsey, Tennessee public affairs director for AAA, encouraged motorists to utilize those current savings for when prices are driven northward.
“It might be a good idea to start thinking a little bit toward what will happen in the spring time and kind of understanding this is great while it’s here,” Lindsey said. “Maybe we need to save a little bit for what will eventually happen in prices. Prices will eventually go back up.”
The record-low prices could amount to a year of significant savings at the pump after record-high oil production in 2014 pushed crude oil and gas prices to the lowest level in six years, according to a AAA press release this week. Not only motorists in Tennessee but also those in Georgia and now in Florida are enjoying gasoline prices at less than $2 per gallon for unleaded. The national average price for regular unleaded gasoline has now surpassed 100 consecutive days of steady decline.
According to AAA, the national average for regular unleaded was $3.32 at the beginning of 2014. Prices inevitably rose in the spring due to refinery maintenance and the switch to summer-blend gasoline, peaking at $3.70 on April 18. Prices fluctuated through the summer, before finishing the year on a historic 97-day streak of declines, dropping $1.08 from Sept. 26-Dec. 31. That streak reached 101 days on Sunday, with prices falling a total of $1.13 so far.
Lindsey attributed the dramatic decline in prices to a steady increase in oil supply with U.S. oil production at its highest level in three decades.
“Much of that is due to our own U.S. domestic production,” Lindsey said. “I’ve heard some sources say that we’re actually producing more oil than Saudi Arabia, so that’s a significant change in the way the global oil economy worked.”
West Texas Intermediate, the U.S. benchmark, began in 2014 at $95.44 a barrel on the New York Mercantile Exchange. WTI peaked at $107.26 on June 20, before falling to $53.27 on Dec. 31, the lowest price since May 2009, according to AAA.
Overall, AAA has estimated that Americans saved about $14 billion on gasoline in 2014 compared to 2013, based on monthly prices and consumption. Gas prices were $1.11 more expensive just one year ago, according to AAA.
“This year promises to provide much bigger savings to consumers as long as crude oil remains relatively cheap,” Mark Jenkins, spokesman for AAA-The Auto Club Group, said. “It would not be surprising if U.S. consumers save a total of $50-$75 billion on gasoline in 2015 if prices remain low.”
Karim Boghani, store owner of the Red Top Market gas station, said he dropped his price for regular unleaded gasoline on Dec. 23 to help his customers save money at Christmas time, adding that there is little profit off of the cheaper prices once credit card, gas taxes and other fees are taken into consideration.
“It’s not that we are making any money off of it,” Boghani said. “The cost at which I’m selling at $1.99, it’s breaking even, but the gas volume it’s doubled. And sometimes you get the benefit of customers coming inside and they buy different things.
“It’s unbelievable in the way the prices have dropped in one year,” he added. “It’s very unpredictable right now.”
Bimbo’s Deli and Fireworks gasoline and convenience store in Lenoir City co-owner Eddie Simpson agreed.
“Gas itself is costing probably a $1.60 wholesale, and then you add 41 cents of tax and freight on top of that, and that’s what gets it past $2. ... Normally on an average year we are lucky to make 1 or 2 pennies per gallon. That’s a fact,” Simpson said.
“We’ve had a very good year volume wise,” he added. “I think it did definitely helped travel, and I think what’s happened too, when you get people to stop in and buy gas we hope they buy something else to go with it. It seems like we are up 8-10 percent over last year in inside sales, so that’s helped a lot.”
Simpson, who also serves as the county’s highway superintendent, said that while customers are saving at the pump for regular gasoline, some county and city offices, such as the highway department and Lenoir City and Loudon utilities boards, are not enjoying some of the same benefits with diesel trucks.
The average motorist currently saves a little less than $22 for a 15-gallon tank of gasoline, compared to what was paid when prices were at their peak in April, AAA said in a press release.
Gasoline prices are forecast to remain much lower this year, with the national average price for a gallon of regular unleaded forecasted to be $2.60, 74 cents below last year’s average, according to AAA.
