By Mike Copeland

Tribune-Herald business editor

Mohammed Azam prepared to lower the price of regular unleaded gasoline by 6 cents at RaceWay on South Valley Mills Drive on Monday morning, and he spoke about the law of supply and demand.

“Gasoline sales have been down, so the price is going down,” said Azam, who dropped his price from $3.29 a gallon to $3.23 a gallon as several cars breezed into the station to top off their tanks.

The scene playing out at gas stations reflects a nervous international economy. Oil and gasoline consumption is falling, sending prices down at the pump — a silver lining to an otherwise bleak situation.

Congress passed a $700 billion financial rescue plan last week, and President Bush immediately signed it into effect. But that didn’t stop the Dow Jones industrial average from plunging below 10,000 on Monday for the first time since Oct. 29, 2004.

“The bailout has simply focused people’s attention on the economy even more. They see so many cracks in the foundation that they are panicking and dumping stocks,” said Kent Gilbreath, a Baylor University economics professor. He said he doesn’t expect the stock market to “provide any decent performance for 12 to 18 months.”

World stock markets are plunging, as well, as traders believe the bad-debt crisis in the U.S. is spreading to Europe and elsewhere. This will further dilute demand for oil, experts say.

“Generally, demand for oil is likely to decline as an economy diminishes production,” said Gilbreath, adding that demand is falling in the United States in part “because people are desperately trying to find ways not to consume gasoline. They are paying at least $2 more than they think they should be paying, so they are lowering demand. And that’s impacting oil prices in a downward direction.”

Oil prices briefly dipped below $90 a barrel Monday on the New York Mercantile Exchange, oil’s lowest price since Feb. 8. Oil prices have tumbled nearly 40 percent since peaking in July.

Falling oil prices typically lead to falling gasoline prices. At some local establishments, they’ve fallen below $3 a gallon.

The Czech Stop in West, for example, which may be better known for its kolaches than its low gas prices, reduced the price of regular unleaded by a dime to $2.99 on Saturday.

“We sell the gas cheap, and when we get customers in the door, we sell them something else,” said Mark Lichnovsky, assistant general manager.

The tactic has worked so well and attracted so much traffic that two delivery trucks were called in Sunday to refill the tanks.

Closer to Waco, the Sam’s Club and Wal-Mart stores in Bellmead had their own gas war going, with their prices dropping to $2.99 on Monday, according to Sam’s Club manager Steve Swope.

“We’ve seen a very large increase in gas sales,” he added.

Several locations around Waco were selling regular unleaded for less than the state average of $3.39 a gallon.

A month ago, the state average was $3.53 a gallon, so it has dropped 14 cents in that time. A year ago, the statewide average was $2.67, according to the AAA automobile association.

“Gasoline in San Antonio is a lot higher than it is here,” said Krista Fitzpatrick, who was filling up her Mazda Tribute at Waco’s RaceWay station Monday. Fitzpatrick, who spent $37.01 to top off her tank, is stationed with the Air Force in San Antonio but has relatives locally.

“I think falling gasoline prices will remain the trend through the end of the year and into the first quarter, with the economy the way it is,” said Scott Sonntag, a local gasoline distributor.

The Associated Press reports that investors will be watching to see whether the Organization of Petroleum Exporting Countries will move to cut output, should prices continue to fall.

Even with the bailout in the U.S., “we are headed into some tough economic times,” said Gilbreath, who envisions layoffs, business closings and a general freezing of credit.

“The freezing of credit will affect the durable goods sector,” he added. “Automobiles, appliances, furniture and many other traditional strengths of the economy are going to get hammered the next few months.”

mcopeland@wacotrib.com

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