Will a gallon of gas ever cost $3.10 again?
If current trends continue, it might happen by the fourth quarter, according to some economists.
In the last month, gas prices in Baltimore and across the country have retreated to below $4. The average price of a gallon of regular gas in the Baltimore area fell for the 24th straight day on Tuesday to $3.71, down 30 cents from its height in June, according to AAA.
Baltimore City resident Angela Sanders has been on the lookout for low prices on Eastern Avenue, and Tuesday afternoon the winner was the Royal Farms near Hornel Street at $3.59 a gallon. Sanders said the price was down from $3.67 just a day before.
“It’s a couple cents here and there, it adds up,” she said while filling up her Ford Focus. “There’s nothing you can do about it. It’s like BGE, you have to pay it.”
Those prices should stay low for the next few months, analysts said.
“We’re entering a new reality. This is not a temporary respite in oil prices,” said Chris Lafakis, an associate economist with Moody’s specializing in gas and oil.
“If we do get continued weakness in the oil market, we really could see $3.10 to $3.20 in the fourth quarter. It’s a real possibility, given the developments in the world market.”
Those developments include the surging value of the dollar, a worldwide drop in demand for oil and decreased activity from speculators, Lafakis said.
Maryland prices fell for the 24th straight day Tuesday to $3.74 per gallon, down 7 percent from its June peak of $4.05. National averages fell for the 26th straight day to $3.79 per gallon.
Oil may fall to about $100 per barrel, but that would only cut prices at the pump to about $3.40 or $3.50, said Byron King, a oil and gas expert with Baltimore-based Agora Financial.
The dollar has surged in recent weeks, cutting the value of the euro to as low as $1.48 from $1.59 last month. “It doesn’t seem like a lot unless you’re talking about the money system of two entire continents,” he said. “It’s a major league move.”
King said the lack of supply and strong dollar were enough to move the price of oil down despite an escalating conflict between Russia and Georgia.
“It’s not like the perfect storm, it’s more like the perfect calm,” he said. “If something like that happened four or six weeks ago, [oil] could have moved $10 in one day. Instead, Russia almost conquers the place in five days, and oil falls five bucks.”
