Falling gas prices a holiday bonus for suburban drivers
Gas prices have hit their lowest mark in four years and likely will drop another 10 cents to 20 cents a gallon over the next two weeks, according to industry analysts, giving suburban drivers a holiday bonus of sorts.
At the BP station at Algonquin and Arlington Heights roads in Arlington Heights, regular unleaded gas cost $2.89 gallon on Monday — $2.69 if you also bought a car wash.
Customer Nico Zlotek was happy to hear prices could drop even lower.
“I hope so,” Zlotek, of Des Plaines, said. “Christmas is coming.”
“Awesome,” is how Mary Iriarte of Buffalo Grove responded to news of soon-to-be even lower prices. Iriarte refueled at the Shell station at Arlington Heights Road and Route 83 in Buffalo Grove on Saturday, when regular unleaded cost her $2.85 a gallon.
Still, she was cautious and has no plans yet for a holiday road trip. “Let's see how long it stays that way,” she said.
Gasoline futures continued their downward trend and on Friday dropped by more than 13 cents in response to OPEC's failure to cut oil production. The national average pump price on Monday was $2.769, down 92.7 cents from this year's peak of $3.696 on April 26 and the lowest since October 2010, data compiled by Florida-based motoring club AAA show.
“Given that OPEC has decided not to cut production and, for all intents and purposes, are entering into a market share war with the rest of the world, $2 a gallon could be in the cards,” said Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston. “I don't think anyone would have said that at the beginning of the year, or a month ago, or even a week ago.”
While some parts of the country could see prices flirting with $2 a gallon, Patrick DeHaan, of Chicago, a senior petroleum analyst at GasBuddy Organization Inc., said suburban drivers won't get that lucky.
“Illinois is usually above the national average,” DeHaan said, explaining that state and federal taxes, property values and the general cost of doing business in Illinois is higher than in other states. The average price per gallon in Illinois on Monday was $2.842, ranking the state 29th in the country. The nation's cheapest gasoline recorded Friday was $2.18 a gallon at a DM Food Mart in Oklahoma City.
A Monday survey in the suburbs showed gas going for $2.61 a gallon in Aurora, $2.68 in Grayslake, $2.70 in Hoffman Estates, $2.75 in Algonquin and $2.79 in Lisle. Drivers even paid less than $3 a gallon at some locations in Chicago. Just across the border in Kenosha, Wisconsin, a gallon went for $2.45.
“Will the suburbs ever get as low as Kenosha? Probably not,” DeHaan said.
“We could see the cheapest 1 percent of stations (nationwide) get within a few pennies of $1.99 over the next two weeks,” he said. “We'll see at least one station in the nation at $2 by Christmas. And that's not really a prediction at all. That's more like a certainty.”
The drop in the cost of motor fuel from this year's peak translates into $500 in extra disposable income by IHS Inc. estimates. The last time the country's average gas price dipped below $2 was on March 24, 2009, while in the grips of the recession.
DeHaan said he expects these relatively low prices to stick around for a while.
“How much lower can we go? The ultimate bottoming out is tough to gauge,” he said. “I suspect we'll be under $3 for several months. ... Based on what we know today, it could be April or May before we see the next big uptick in gas prices.”
• Bloomberg news service contributed to this report.