Slow economy sends gas prices plunging

Kevin Ferguson

Monday, Nov. 5, 2001 | 9:51 a.m.

There is some good news for consumers in this slumping economy: plunging gas prices.

The average price of a gallon of regular unleaded in Las Vegas dropped Friday to $1.36 as a barrel of crude oil dipped below $20 for the first time in more than two years, said Lisa Foster, spokeswoman for AAA Nevada.

Southern Nevada prices of self-serve gas were a bit lower than the statewide average of $1.43. Nationally, gasoline dropped to an average of $1.25 per gallon.

A month ago in Las Vegas, the average price for a gallon of regular was $1.50, and a year ago, it was as high as $1.78.

Basic economics are the reason for the price plunge: too much supply and not enough demand, experts say.

And much of that is seen in the slumping airline industry, which has slashed flights since much of the nation has grown wary of flying after the Sept. 11 terrorist strikes.

"Airlines have not been buying that much jet fuel and so refineries have a glut. When demand is off you have to get rid of the product by lowering the price," said Peter Krueger, state executive for the Nevada Petroleum Marketers & Convenience Store Association.

Throughout the nation, prices cover a wide range, from Hawaii's $1.92 per gallon to Georgia's $1.10, Foster said.

In some parts of Texas, motorists are finding self-serve gas for less than $1 per gallon, the Associated Press reported.

This is a dramatic drop for the Lone Star state. Back in mid-May, gas prices there were at a record high of $1.61 a gallon, the AP reported.

After a weekend of vacationing in Las Vegas, Flagstaff, Ariz.-resident Lesley Tonga said he was happy to see gas prices dropping as he filled his tank at the Rebel service station on Pecos and Sunset roads.

"We just finished gambling and decided to fill up here where it's cheap before heading back," he said. At that Rebel station, regular was selling for $1.25 per gallon, 11 cents below the average in Las Vegas.

Krueger said Californians and Nevadans generally pay higher prices for gas because the two Western states generally have higher gas taxes than other states.

The nationwide drop in tourism since Sept. 11 is also having an effect on the demand for gas, Foster said.

A barrel of crude oil dropped Friday morning to $19.84, the lowest it has been since July 1999, she said.

The Organization of the Petroleum Exporting Countries, or OPEC, meets Nov. 14 to determine whether it will cut production in an attempt to drive up crude oil prices.

Aside from refineries being at capacity, service stations are feeling more pressure on prices from the big-box retailers like Albertson's, Wal-Mart and Costco that have opened up pumps as loss leaders to drive more foot traffic into their stores.

Gas prices nationwide have been on a downward slope since the summer due to the slumping economy. Experts say the terrorist strikes of Sept. 11 gave gas prices a harder push downward.

But Foster predicts many Americans will travel for Thanksgiving.