As the economy continues to struggle, gas prices are enjoying a downturn. Prices have fallen below $3.00 per gallon in some areas of the country for the first time since the beginning of the year.
Texas, Missouri, and Michigan are just some states posting lower-than-average fuel prices. According to average prices posted by AAA, Missouri has the lowest state average with $3.18 per gallon, whereas residents of Hawaii and California still pay $4.24 and $3.89 per gallon, respectively.
State taxes play a role in the gap in gas prices from state to state, but it also has to do with oil. West Coast states are traditionally more expensive than those in the middle of the country largely due to where oil comes from, according to analysts. Most of the gas on the coast comes from oil refineries overseas, whereas places like Missouri receive its oil from refineries in Canada or border states.
The national average gas price now sits at $3.49 per gallon, which is still much higher than this time last year when drivers were paying, on average, $2.70 to operate their cars.
Lower gas prices are the result of declining oil prices. Last Friday oil prices fell to $79.85 per barrel, dropping 9 percent from the beginning of the week.
Ball State University economist Dagney Faulk says Americans are finally getting some “noticeable relief at the gas pump due in part to decreased demand because of a generally sluggish economy and the end of vacation season.”
Faulk also sees increased supply due in part to the resumption of oil production in Libya as a factor in gas prices.
Falling gas and oil prices are good for the airlines. As the oil continues to decline, stock prices for major airlines rose. American Airlines recorded a 4 percent hike and Southwest boasted a 3.5 percent increase as the stock exchange closed on Monday.
As prices decline, consumers are becoming more willing to spend. According to the National Retail Federation, consumers are more likely to travel farther distances and spend more on incidental items when gas prices lower.
However, gas prices are not expected to continue to decline in the long-term. Financial analysts predict that oil will rise more than 50 percent in the next six months, causing gas prices to jump back up just in time for May flowers.
By Alyssa Caverley for PeterGreenberg.com
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