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Ample supply, weak demand equals cheaper gas

By Johnny Jackson

jjackson@henryherald.com

An increase in supply, and a decrease in demand, are leading to falling gas prices, according to industry officials.

The average price for regular unleaded gas in Georgia slid by 6 cents per gallon over the past week, according to AAA's Fuel Gauge Report. Metro Atlantans also saw average prices decline by 6 cents over the week, from $2.64 per gallon of regular unleaded on Jan. 18, to $2.58 on Monday.

The skid in pump prices is welcomed news for Parminder Grewal, owner of McDonough Station. By midday Monday, Grewal had to change the gas-price sign outside his downtown McDonough convenience store and gas station.

"Anything under $2.75 makes people happy," Grewal said. "When prices are over $2.75, then people are not happy."

Grewal acknowledged he is as much concerned with gas prices as the average consumer is, because higher gas prices affect his store's bottom line. He believes that when prices are high, customers are less likely to shop in the convenience store.

"Sometimes we sell gas on the [retail] price, and we lose money that way to make the price cheaper for the customer," he said. "A lot of people don't know that, though."

Consumers can expect -- barring unforeseen major events in the world -- lower gas prices over the next couple of weeks, according to Jessica Brady, a spokeswoman for AAA Auto Club South.

"We watched the price of crude oil steadily decrease throughout last week, and the price of retail gasoline slowly follow suit," Brady said. "We should see prices continue to decline."

She said crude oil prices are expected to continue the decline through the end of the month as inventories, which rose more than 3 million barrels last week, continue to outpace demand. She said U.S. fuel consumption dropped by 1.8 percent over that time.

"Typically, this time of year, we don't have much demand to begin with," Brady said. "It's very likely we will continue to see prices drop this week."

Southeastern and Midwestern states continue to have cheaper fuel than the rest of the nation.

AAA reported that the national average price of unleaded regular gasoline fell 1 cent to $2.70 per gallon Monday, compared to the $2.62 and $2.60 respective averages in Alabama and Georgia. Consumers in New York and California paid $2.93 and $3.03, respectively.

"It's very much related to crude oil prices," said Doug MacIntyre, senior oil market analyst with the U.S. Energy Information Administration.

MacIntyre said crude oil prices have declined partly because inventory in the U.S. continues to be above average.

"Crude oil prices, not that long ago, were above $80 earlier this year," he said. "They are between $74 and $75 now, which helps drive gas prices down."