BY DIRK PERREFORTÂ AND KEILA TORRES OCASIO
Hearst Connecticut Media
For the first time in five years, gasoline prices in the area have dipped below $3 a gallon.
Several gas stations in the region have begun selling their lowest grades of gasoline for $2.99 or less for members, a level that strikes a chord for consumers and has not been seen since November 2010.
“I hope they stay like that or go lower,” said Ansonia resident Carlos Fanfan, as he filled up at the Cumberland Farms on Pershing Drive in Ansonia. “It”™s a benefit for people.”
At the gas station, regular grade gas was at $2.91 on Nov. 20 for members and $3.01 for nonmembers. Even the higher price was exciting to some customers.
“I can”™t believe I just got $3.01 gas,” said Trumbull resident Jack Alves. “I think it”™s great. I hope it stays low.”
Earlier this month, the U.S. Department of Energy cut its forecast for the average price of gasoline to $2.94 a gallon through most of 2015 ”” a 44-cent drop from its previous forecast of $3.38 per gallon.
Home heating oil prices are also dropping to levels not seen since 2010.
That could leave consumers with a few extra dollars as they head into the holiday shopping season. And it”™s a trend, based on increased supply and lackluster demand, that many experts predict will continue well into next year.
“If anything, the worst news would be that gas prices will level off,” said Christopher Herb, president of the Connecticut Energy Marketers Association. “For the first time in years, we are seeing a market based on the fundamentals, rather than speculators. We are as close to a pure supply-and-demand market as I”™ve ever seen.”
Herb and area economists point to weaker demand for oil from Europe and China combined with higher productions rates in North America as the main reasons for the price drop. The price of crude oil fell below $75 a barrel as production in the U.S. reached 9 million barrels a day, the most in nearly 30 years.
Consumers also have become more energy-efficient, both in their homes and with their vehicles, as a result of the recession, Herb said.
“Demand isn”™t going back to where it was,” he said.
When prices are down, it”™s the perfect time to focus on ways to conserve energy, said Tom Santa, president and CEO of Santa Energy Corp.
“I think what people need to do is put the money they had budgeted (for home heating oil) into energy conservation so if prices go back up they”™ll be spending less,” he said. “We hear so many people say, ”˜Oh I can buy a big car,”™ or ”˜I can take a long drive through the countryside.”™ I think we need to keep in mind that energy conservation is still important.”
In the runup to Thanksgiving, Fran Mayko, spokeswoman for AAA”™s Southern New England-Connecticut division, forecast that the lower gas prices would help lead to a record year for travel on the holiday.
“The conventional wisdom is that prices are probably going to continue downward through the Thanksgiving holiday,” Mayko said. “That being said, what goes down must come back up. Hopefully, prices will stabilize.”
Nick Perna, an economist with Webster Bank, said the lower prices couldn”™t come at a better time with the holiday shopping season arriving. Besides leaving people with more money to spend, lower gas prices give people more confidence in the economy, he said.
“It”™s the equivalent of a tax cut and it amounts to a lot of money,” he said. “Most consumers judge the economy on two or three things: the price of gas, where the stock market is going and whether oil is going up or down.”
The Consumer Confidence Index rose in October more than five points, to 94.5 from the 89.0 reported by The Conference Board for September.
While many experts predict the price of oil will remain low for the foreseeable future, others said a major geopolitical event could alter the landscape.
“We could see an invasion (of Ukraine) by Russian armies or a crisis in the Middle East that could spook the speculators and bring them back into the market,” Herb said. “There is no guarantee this will last forever.”
Hearst Connecticut Media includes four daily newspapers: Connecticut Post, Greenwich Time, The Advocate (Stamford) and The News Times (Danbury). See newstimes.com and ctpost.com for more from these reporters.
