Gas, crude oil prices continue their descent

By Johnny Jackson


Declining retail gas prices have made more than consumers happy.

"We're expecting to get more business," said Parminder Singh Grewal, owner of McDonough Station in downtown McDonough. "There's a big difference... when gas prices are low, people start coming in."

Grewal said cheaper prices at the pump always have translated into more business in his neighborhood filling station store. He said his hopes are to increase in-store business with the typical spike in traffic as the Memorial Day Weekend approaches.

However, the Memorial Day Weekend historically has been connected with higher gas prices, according to Jessica Brady, spokeswoman for AAA Auto Club South.

"Typically, you do see gas prices rise at this time of year," Brady said. "Memorial Day Weekend marks the beginning of the summer travel season. But if you couple the ample supply that we have and the strong dollar, you have lower gasoline prices."

The average retail price for regular unleaded gas has decreased by 10-cents over the past week in metro Atlanta, according to AAA's Daily Fuel Gauge Report. Monday's $2.70 per-gallon average fell below the $2.73 per-gallon average reported the month prior.

"Lower retail gasoline prices are always welcomed by consumers, and they can expect to see just that as retail prices drop again this week," added Brady. "It wouldn't be surprising if it actually continued throughout the rest of the month."

Brady said declining gas prices have been the result of plummeting crude oil prices which have dropped three weeks straight on the New York Mercantile Exchange (NYMEX). Crude oil prices held around $70 per barrel Monday on the NYMEX as markets and investors responded to speculation about the global economic recovery.

"The European crisis has pushed the value of the euro down 12 percent against the dollar, and is one of the major factors that has caused the price of crude to decrease," explained Brady. "At the same time, U.S. stockpiles of crude grew for the 15th week. The possibility that Europe's financial problems will slow global demand at a time when U.S. demand is already slow to rise, has investors worried."

Brady said the lack of demand has been demonstrated in the constant increase in U.S. stockpiles of crude, now well above 362 million barrels, or at nearly 88 percent capacity.

She expects to see prices rise at some level later this summer to as much as $3 or more per gallon briefly, in some spots around the Southeast, which currently enjoys the cheapest gas prices in the country.

Filling station owner, Grewal, believes when gas prices stay below $3 per gallon, customers are more apt to enter his store and make other purchases. When prices are above $3, he said, customers tend to shy away from neighborhood stores like his, to got to larger outlets and retailers.

"People will stay in the neighborhood now," Grewal said. "When gas is cheap, people don't care what brand they get, or where they get it."