Daily Auto News Gas Prices At 2 Year Low: Will It Last?
Daily Auto News
New vehicle sales aren’t the only thing plummeting these days. So are gas prices….
Gas Prices Found Below $2.00
According to the Boston Globe, “U.S. retail gasoline prices declined in the latest week…making prices at the pump on the eve of the presidential election the lowest since February 2007.” The United States Energy Information Administration (EIA) reports that the current national average for gasoline is $2.40 ($308.8 for diesel fuel) per gallon — a significant decline from the $5.00 figures that drivers were experiencing in July and August of this year.
Some places, including Greenville, South Carolina, are even reporting gas prices below $2.00 per gallon.
Carol Gifford, a spokeswoman for AAA of the Carolinas, tells The Greenville News that “the demand for oil is dropping in the international market and that has translated into price declines in the domestic market.”
After interviewing Phil Flynn, vice president and senior market analyst for Alaron Trading Corp., The Detroit News further explains: “The cost of crude oil skyrocketed to a high of $147 a barrel in July because investors considered it a safe haven in a credit crisis believed only to be affecting the United States, Flynn said. But when the crisis impacted other parts of the world and demand fell around the globe, prices also plummeted. On Monday, crude oil fell below $65 a barrel.”
Will The Low Gas Prices Last?
The decline in gas prices, however, may not last too long, as the Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut back on its production of crude oil to curb losses in income, reports The Washington Post.
With the Northern Hemisphere moving into winter months, the seasonal demand for heating oil will continue to rise in the coming months, placing upwards pressure on oil and gas prices. Barring unforseen events, however, gas prices are not expected to return to the $4.00 level in the near future.
Still Not Helping Automakers
Unfortunately for auto makers, the decline in the price of gasoline hasn’t translated to increased new vehicle sales, as the global financial crisis now serves as an even bigger barrier to consumers wanting to buy a new car. An industry analyst for Edmunds.com tells The Tennessean: “Showroom traffic in October was way down because of a lack of consumer confidence and some credit problems. A lot of people are worried about their jobs, their savings and their retirement, and that didn’t put them in the mood to make a $30,000 vehicle purchase.”
Lackluster sales have left carmakers desperate to move even the fuel-efficient small cars that were selling at a fast clip only six months ago. As a result, they’re now offering historic 0% financing and other car deals on nearly every model.
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