Gasoline prices have fallen below $3 a gallon for the first time since early this year, and the steady decline is expected to continue through the end of the year.
Atlanta's average gasoline prices peaked in mid-May just shy of $4 a gallon, according to atlantagasprices.com, and have been trending downward since.
"As of now, it looks like retail gas prices will fall throughout the end of the year," said Jessica Brady spokeswoman for AAA's Georgia branch.
Brady said multiple factors have led to prices declining in the second half of 2011, including:
- gasoline demand levels for the last quarter of 2011 are 3.6 percent lower than last years numbers, causing stockpiles of gasoline to increase
- Europe's lingering debt issues and somber economic outlook continue to put downward pressure on oil prices
- prices also dropped after OPEC (Organization of the Petroleum Exporting Countries) agreed to increase crude output quotas to 30 million barrels a day to meet future expected growth numbers for 2012
Matt Skinner, manager of the QuikTrip on U.S. Highway 278, said it’s been nearly a year since the price last dipped below $3 a gallon. QuikTrip’s prices are based on local competition and the price of the oil barrel, which has been steadily declining.
The decline has been good for consumers, but the first half of 2011 saw the exact opposite trend — a steep price increase. The average price in Atlanta was $2.86 a gallon at the beginning of 2011.
“There are a multitude of factors that drove up oil and gas prices in the past year, starting with the turmoil in Egypt at the start of 2011, moving to Libya and spreading across the Mideast to natural disasters and credit ratings to currency values — so in a nutshell economic conditions both domestically and globally, turmoil across the globe and natural disasters have played a role in increased gas prices,” Brady said.
While some of those specific situations have changed, demand for crude oil continues to rise globally, especially in the developing nations of Asia and Latin America, according to a Dec. 19 Associated Press article.
“And yes, although retail gas prices have and continue to fall into the end of the year, it’s likely prices will inch back up in 2012. But at what point they will begin to rise is unknown,” Brady said.
“Typically, there’s a rally in the market after the first of year on optimism fuel demand will increase during the new year. Also, tensions are brewing in Iran as stricter sanctions are being placed on the country to curb their nuclear program that could have adverse affects on the oil market by driving prices higher.”
Brady said four factors typically dictate price differences within a city or region:
- varying city and county gas taxes
- amount of competition in a general area
- location of retail gas stations - the more convenient ones tend to be the more expensive
- distribution costs to a particular city or county.