Falling gas prices likely to go lower

ATLANTA — The last time gas prices were this low, we complained about how high they were.

Since then, we've gotten a little more perspective. We've seen gas prices breach $3 a gallon. We've sat in gas lines. We've learned it could get a lot worse.

Prices in metro Atlanta averaged $2.37 for a gallon of regular gas Thursday, according to AtlantaGasPrices.com. Compared with the $3.05 of a month ago, that's cheap. And it's likely to get cheaper still.

"I'd expect $2.10 to $2.20 a gallon in the next week or two," said economist James Williams of WTRG Economics, an energy consulting company.

That's because much of the damage to the energy sector has been repaired. Refineries are back online, many rigs and platforms are working, and pipelines are pumping.

Moreover, the United States has been importing record amounts of gasoline from Europe. Oil prices, too, have fallen from their storm-surge levels.

Even with the price dip, filling the tank of her SUV is a $60 expense, said Tammy Hansen of suburban Atlanta.

She has become a lot more choosy about car trips. She and her husband decided not to take a vacation trip to the ocean. She's looking for a more cost-efficient car.

Daily decisions, too, have changed.

"I am making an effort to not go as many places as I used to," she said. "I don't go to Perimeter Mall to shop as much or up to the outlets in Dawsonville. I'm staying closer to home and shopping at North Point."

Gas prices have been rising for several years, bumped up mainly by higher demand in Asia and the United States. Gasoline in metro Atlanta rose above $2 a gallon in late spring, and then spiked when hurricanes Katrina and Rita roared through the Gulf of Mexico in late August and September.

The storms cut production of oil, closing platforms and rigs, and sending the price soaring from $60 to $70 a barrel within weeks. Typically, a move of $1 a barrel in crude oil means about 2.5 cents a gallon at the pump, but Atlanta drivers got a much worse price shock, Williams said.

After Katrina, metro Atlanta gas prices jumped to more than $3 a gallon — with some stations briefly charging as much as $5 — as pipelines that carry even limited supplies of fuel to Atlanta were shut down by power outages in the storm's path.

Consumers in Atlanta responded to shortages by rushing to fill tanks, driving the price of gasoline even higher and tapping out some stations' supplies. They got a slight discount in September, when Gov. Sonny Perdue temporarily halted the state's tax on gasoline, saving them roughly 15 cents a gallon.

Rita made the supply situation worse, although by that time, metro Atlanta drivers apparently had learned not to panic about shortages.

Gasoline is often treated as a nonnegotiable need. But in the face of higher prices, consumers find ways to conserve.

Kate Lee, for example, said she changed her driving habits when gasoline first hit $2 a gallon. She hasn't gone back to her old ways — even though the cost of filling her 13-year-old Acura has dropped backed under $40.

"I started doing all my errands together. If I was going downtown for a breakfast, I'd combine that with a visit to some agency we were supporting. Instead of having my husband meet me at the soccer field, we'd coordinate better."

Global supplies continue to barely outpace demand, so most economists believe any downward trend in gas prices is temporary.

Still, American gasoline consumption during the past four weeks dipped 1.7 percent from the same period a year ago, according to the Energy Information Administration. In the weeks when gas prices crested, use of gas was down even more.

Even a percent or two is a lot of gas: The nation uses roughly 375 million gallons a day, said Williams of WTRG.

The price of oil, below $60 a barrel earlier in the week, closed on Thursday at $61.77.

So if oil prices stay where they are now — around $60 a barrel — Atlanta drivers should see pump prices continue to retreat, Williams said. "You'll probably have a drop of 20 cents or so in the next week or two."

But demand for gasoline is part of the equation, and less demand means lower prices, he said. "If you really want gas under $2, I'll tell you what to do: Drive like it's over $3.50 a gallon."

Michael E. Kanell writes for The Atlanta Journal-Constitution. E-mail: mkanell@ajc.com