That was no mirage Thursday outside the Sam’s Club on East Waco Drive. Regular unleaded gasoline was selling for $1.99 a gallon, the first local petroleum retailer to tumble below the $2-per-gallon plateau.
With prices locally plunging another 8 cents the past week, Sam’s Club soon may have company, said Patrick DeHaan, petroleum analyst with GasBuddy.com, speaking by phone about rising oil inventories, falling oil prices — at least until Thursday — and their impact on pump numbers.
“There in Central Texas, you could see prices fall another 5 to 15 cents now or in 2019,” said Chicago-based DeHaan.
The only cloud on the horizon is talk among oil producing and exporting countries that they may decrease production to drive up prices, DeHaan said. He also noted the wholesale price of gasoline rose a nickel on Thursday, while oil was up $1.23 a barrel.
For now, though, those shopping for holiday gifts will have more jingle in their pockets — and that’s fine with Laura Chiota, city of Waco budget officer, who expects sales tax revenue to exceed $30 million this fiscal year. The more discretionary income consumers have, the better the city’s chances of seeing hefty sales tax rebates from the Texas Comptroller’s Office. Money spent on gasoline does not find its way back into city coffers.
“I would guess this is coming at a good time for merchants, with the holiday season upon us,” said Chiota, speaking by phone. “We obviously benefit from lower fuel prices for several reasons, among them the price we pay to keep our vehicles running. We take a conservative approach to preparing our budget, which envisions unleaded gasoline priced at $3.25 a gallon, diesel priced at $3.75 a gallon. If fuel prices continue to fall, the city manager’s office, in conjunction with the city council, may take action.
“But as of now, we will keep those projections in place,” Chiota said.
Releasing a prepared statement, the National Retail Federation said low gas prices are always welcome as they allow consumers to spend on other items such as groceries, apparel, and holiday gifts, since we are in the season.
Local motorists on Thursday were paying $2.09, on average, for a gallon of regular unleaded, according to GasBuddy.com. That was down 2 cents from Wednesday, 9 cents from a week earlier, and 36 cents from a month earlier.
One year ago, the average stood at $2.19, according to GasBuddy.com, which tracks retail prices at 124 locations in Greater Waco.
Price reductions have come hot and heavy in recent weeks.
Ben’s Short Stop, a Chevron-branded station on Hillcrest Drive, was charging $2.09 a gallon on Thursday, down from $2.19 Wednesday evening.
“Why are they coming down? I have no idea,” said an employee, who declined to provide her name. “Everyone’s price is going down. My boss told me to change them this morning, so I changed them.”
At Sam’s Club, manager David Martinez said the $1.99 price was available only to members, who pay either $45 or $100 a year for a basic or enhanced membership. Martinez said Sam’s Club strives to charge competitive prices, so he did not really notice an increase in traffic at the pumps.
Karr Ingham, an Amarillo-based economist who prepares a monthly economic snapshot for the First National Bank of Central Texas and the Tribune-Herald, called falling gas prices “an unexpected consumer blessing.”
“I filled up in Amarillo this morning, and paid $1.92 a gallon, at Walmart. Everybody up here is charging a touch above or below $2 a gallon,” said Ingham, who also serves as a consultant to the Texas Alliance of Energy Producers, a 2,600-member organization. “Clearly, there is one reason for all this: a pretty sharp drop in crude oil prices. Oversupply concerns started pushing prices down in mid-October, and we’ve seen a slide of about $20 per barrel. Gasoline prices have gone down with them.”
Ingham said gas prices were not onerous even before the slide began, and he expressed doubt they will become burdensome in 2019.
“Growing U.S. production, even at current prices, will put a lid on any drastic increases,” said Ingham. “Global politics, of course, will play a role in any decision made by OPEC, which meets again in just a few weeks. But as I sit here today, I just don’t see any reason for great concern in the near term.”
Danny Vannatta, a salesperson for Reeder Petroleum Distributors, said he’s enjoying telling farmers and construction companies that fuel prices have dropped another nickel. But he wonders how long the fun will last.
“As soon as we see some kind of skirmish overseas, we will see a spike,” he said. “I’ve been waiting for a change, but haven’t seen it yet. We continue to have a surplus, and prices will go down as long as that continues.”
Prices hovering at or near $2 a gallon for regular unleaded gasoline were commonplace on Thursday, with Murphy USA, H-E-B, Stripes, Pilot and Flying J locations in South Waco and along I-35 charging $2.01 to $2.03 a gallon.
DeHaan said the lowest price nationally on Thursday was $1.69 per gallon for regular unleaded, though he did not have an exact location. He said the Sherman-Denison area was the first nationally to post a communitywide average of less than $2 per gallon for regular unleaded.