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The return of cheap gas prices

Craig Hall was travel-tired as he pumped gas at a Shell station on Harper Road — crapped legs, sore back and strained eyes.

However, there was a bright spot in his road travels from Ohio to the sandy beaches of Wilmington, N.C. — gas prices.

The farther south Hall traveled, the cheaper gas prices became, he said.

Over the last few weeks, travelers have saved more than a few dimes on each gallon of gas. Actually, prices have gone nowhere but down since June, according to AAA, which is reporting the average price of regular gasoline is now $2.40 per gallon — or more than $1 less than Labor Day 2014.

Locally, the cheapest gas Wednesday afternoon was $2.35 on Dry Hill Road in Beckley, according to Gasbuddy.com, a website that tracks gas prices. Several gas stations on Harper Road were selling gas for $2.36 a gallon.

Statewide, the average price for a gallon on regular was $3.39. The cheapest was $2.12 at three stations in Cabell County. Parkersburg drivers are also getting by cheaper than average at $2.13 a gallon, according to the website.

Last Labor Day the average price for a gallon of regular in the Mountain State was $3.50, the site reports.

Local road warriors are taking advantage of the lower gas prices. Rather filing up eco-friend hybrids or gas-burning road hogs, drivers were at the pumps Monday talking about the savings.

“It’s great,” said Sheila Adkins of Raleigh County, who explained with school-age children every dime saved is needed.

“If I can save a dollar here, 50 cents there, it eventually adds up,” said Adkins, who spends now $20 to $25 a week on gas.

At the next pump, Linda Gunther was filling her big, black SUV, watching the amount zoom upwards as she stood looking into space. Finally, when the pump made that thump sound indicating a full tank, her damage was $38 and change. Undaunted, she said, “Not bad for a full tank in this thing.”

Gunther explained before the current prices, she was paying about $65 to fill her Ford Excursion’s gas tank.

“I am saving about $15 to $20 a week,” she said.

The women said the extra savings are helping — it is putting shoes on kids’ feet or allowing the purchase of “the little things.” The mothers are elated for the gas price slump.

Gas prices are declining largely because the bottom has fallen out on oil prices. Crude oil accounts for about half the cost of a gallon of gas, according to the American Petroleum Institute’s website.

So as oil goes, so does gasoline. Oil was trading below $46 a barrel Wednesday afternoon. Last summer, a barrel of oil was selling at $100. Like all commodities, oil is bought and sold on world markets and largely driven by supply and demand.

In related news, Cheaper prices spur U.S. gasoline demand: Kemp.

And there it is — perhaps the two most important words in understanding economics — supply and demand.

First, a surge in production from American shale producers has led to a massive glut (supply) of oil. Normally, when prices fall, Oil Producing Exporting Countries, known as OPEC, steps in and cuts production. But not this time. The cartel of some of the world’s largest oil suppliers — led by the Saudis — are pumping record amounts.

The fact that Iran may be reopened to Western oil interests, because of the pending sanctions, has also helped drive prices lower.

Not only is there too much supply, but demand for oil has been sluggish.

Some developed economies in Europe and Asia are barely growing and Latin America’s emerging markets are struggling financially. Economies need less oil when they cool off.

While most do not realize that global economics has a direct impact on their finances, gas prices are an example that nearly everyone feels the effects.

So, the good news is gas prices are headed lower still, at least one expert predicts.

The Energy Information Administration, a government agency that tracks the sector, is forecasting that the national average will drop to $2.11 a gallon by the end of this year.

Why? The supply and demand, again. Those two factors are not expected to change much. Besides, people always drive less after Labor Day, creating even less demand for gasoline, and U.S. refiners switch later this month to a less expensive blend of gas.

AAA said it believes gas will fall below $2 in many parts of the country by Christmas.

Merry Christmas, a few months early.

This article was written by DANIEL TYSON from The Register-Herald, Beckley, W.Va. and was legally licensed through the NewsCred publisher network.

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