Prices should continue to fall, but is that a good thing?

Yesterday’s market drop will be a welcome relief for consumers at the gas pump. The Chicago spot fell more than 12¢ yesterday, and has fallen more than 50¢ from it’s high a few months ago. Instead of seeing $4 gas, we are now getting close to seeing prices below $3 at the pump.

But is this a good thing? Last time we saw a large drop in gas prices, the bottom really fell out, and didn’t stop until we were below $2. But that was because we were in a recession. And all indicators are looking like we will be entering a double dip sometime soon if things do not change. So while we see something we really like to see, lower prices at the pump, we will also be seeing a weak economy get weaker. I for one hope this isn’t the case.

With market prices where they are, we have a 25-30¢ gap between current averages, and where prices should be. Expect prices to continue the current trend, going lower through the weekend (unless the market explodes today).

Updated: September 23, 2011 — 8:14 am

12 Comments

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  1. To quote SNL:

    Really?!? No, really?!? You actually believe that lower gas prices are a bad thing? What do you think helped bring both the US and World economies to the brink of collapse ONCE AGAIN?

    Energy prices are what is inhibiting any REAL recovery and growth. It has been said for MONTHS that there was no justification for these prices other than speculators running them up to make a profit.

    I for one would put money in the economy if it wasn’t having to go in my gas tank …

  2. It’s a good thing prices are falling. But it’s a bad thing if the reason is the economy.

  3. Let’s be clear- we all like falling gas prices. We just don’t like what it means for the economy in this case.

  4. I agree with John R. The higher the gas prices go, the less I go out to eat, the less I stop at the store down the street to pick up a couple of items when I can wait until I need actual groceries and get a lot more for my $$$$ at a Walmart Supercenter for a HECKOFALOT better prices [example – a particular jar of something I like, $8 at Meijer, Family Fare, D & W – – $5 at Walmart and that’s just ONE item!!], no movies at the theater, no stopping for ice cream at the local diary barn. I’m tellin ya, I’m an EXPERT at how not to spend money – so keep them gas prices coming and I’ll keep tightening my belt. AND, I haven’t even begun the couponing yet, but I will!!!

  5. On Wood TV8’s Website

    GAS PRICE DIP BELOW $3 IN MICHIGAN
    Reports of $2.98 in Lansing area
    Updated: Friday, 23 Sep 2011, 1:12 PM EDT
    Published : Friday, 23 Sep 2011, 1:12 PM EDT

    GRAND RAPIDS, Mich. (WOOD) – Prices for unleaded gasoline dropped to $2.98 per gallon at several stations in Lansing on Friday, according to GasBuddy.com.

    Officials say these prices may not last, so fill up without spending a lot if you can.

    As of early Friday afternoon, here some of the lowest prices around Michigan —

    $3.38 in Grand Rapids [AND UP TO $3.68]
    $3.41 in Kalamazoo
    $3.19 in Detroit
    $3.26 in Flint
    $3.35 in Ann Arbor
    $3.65 in Gaylord
    $3.53 in Traverse City

    Motorists should expect average prices to be $3.25 to $3.50 for the next few weeks as economic concerns continue to drive speculators out of gasoline, according to GasBuddy.com officials.

    Concerns are plentiful that the US economy is entering a time of extended slow down, thus reducing the demand for gasoline, they said in a news release.

  6. Unfortunately, Oil is a world market. And the world is using more, especially with China and India selling cars at rates unheard of in their countries. As long as the demand is high, so too will be the price.

    Demand is down. Unfortunately it’s because of recession fears. I’d like to see sub-$2 gas again, but not if we have to have a recession to do so.

  7. It is 8:49 p.m. ET Sunday. There normally isn’t much movement of gas prices on Sunday (except for that extremely rare afternoon on April 3), but GasBuddy is showing increases in averages in the past 24 hours in 4 of 6 major Michigan metros, as well as the Michigan average:

    +5.1¢ Ann Arbor $3.505 to $3.556
    +2.7¢ Lansing —- $3.267 to $3.294
    +1.9¢ Detroit $3.479 to $3.498
    +1.4¢ Michigan — $3.499 to $3.513
    +0.2¢ Grand Rapids $3.498 to $3.500
    -1.7¢ Flint —— $3.395 to $3.378
    -2.4¢ Kalamazoo $3.464 to $3.440

    I don’t think this means anything, other than maybe some chain (like Admiral) is loss leading less. My experience in Kalamazoo says to expect some stations here to drop 5 to 10¢ tomorrow, as there have typically been some sizable decreases on Mondays when the market is falling. At the moment, there are 6 stations in the immediate Kalamazoo/Portage area reported at $3.399. The Admiral here is reported at $3.419, so they’ll probably go down to $3.369 around 7 a.m. tomorrow.

    Here are the average increases over the past 24 hours in Indiana and Ohio:

    +8.9¢ Evansville $3.340 to $3.429
    +5.0¢ Gary $3.473 to $3.523
    +2.3¢ Akron $3.322 to $3.345
    +2.3¢ Cincinnati $3.319 to $3.342
    +1.3¢ Dayton $3.293 to $3.306
    +0.9¢ Toledo $3.285 to $3.294
    +0.7¢ Ohio $3.329 to $3.336

  8. Lower Gas Prices will help the economy, because people will have more money to put back into the economy, and to be able to pay their mortgages…

    The Only thing High Gas Prices does, is feed the Crooks Stealing from us…

    So, Let Bring them Down, Down, Down…

  9. I think the WSJ did a good job on this piece:

    http://online.wsj.com/article/APb1eb849aac714a38865c89b161e4bf77.html

    Tip of the hat to Patrick as well, for making it into the article.

  10. While it is a good article, yes, it made one thing abundantly clear at the end. While we may be enjoying a little bit of a break right now . . . . come spring, as High Voltage put it, “The Only thing High Gas Prices does, is feed the Crooks Stealing from us…” and we can expect to see that again next spring when once again, everybody starts cutting back on their driving and can we say, let’s scr*w tourism for Michigan!!!!

  11. New York October gasoline futures are currently up 10.1¢ this morning to $2.6704.

    New York November crude oil futures are currently up $3.09 this morning to $83.33.

    Yesterday’s spike line had a 17.8¢ Speedway average margin, so this market move isn’t enough to give us a reset tomorrow.

    Current retail averages:

    $3.450 Ann Arbor
    $3.432 Michigan
    $3.416 Detroit
    $3.414 Kalamazoo
    $3.410 Grand Rapids
    $3.359 Flint (up 0.9¢ in past 24 hours)
    $3.237 Lansing

  12. Funny what a day can do. A big rise in market prices (11.5¢ for the Chicago spot) and big drops at the pump mean we are due for a spike. Plan on prices going up tomorrow or Thursday. All because the EU said they will enact a big stimulus, and we have a better outlook economically.

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