Gas prices tumble below $2 a gallon across Hampton Roads

joneal@dailypress.com

Watching numbers on the gas pump flicker with frequency, Tayler Baldwin can remember a time when she dreaded filling-up her bright red Volkswagen Beetle.

"It used to cost me about $35 to $40 to fill up my car," said Baldwin, who took a pit stop at the Wawa on J. Clyde Morris Boulevard in Newport News Monday afternoon while traveling to her final destination in Virginia Beach. "Now, it's less."

Much less, according to Baldwin, who now averages $25 to $30 every time she fills up her tank.

She's not alone.

Gas prices are falling across the Peninsula, now averaging $1.99 for a gallon of regular unleaded, according to a AAA Tidewater Virginia report released Monday. That's down from this time last month, when a gallon of regular unleaded cost Peninsula drivers on average $2.33 a gallon.

This time last year, an average gallon of regular unleaded was $3.15 across the region.

With no impending natural disaster or any serious disruptions to domestic or international supplies, prices are expected to steadily fall. Some experts estimate an additional 10-cent decline in the coming days.

In some areas on the Middle Peninsula prices are even lower, with some drivers reporting prices below $1.90 in places around Gloucester and Mathews counties.

"How low the prices will go is anyone's guess right now," said Georjeane Blumling, AAA Tidewater Virginia spokeswoman. "I'd be very surprised if prices were to go down another 50 cents, but then again, we're surprised that gas prices have gotten to the point where they are today."

Don't expect the gas price slide to continue. Rather call the current trend temporary.

"Don't count on gas prices staying low the whole time," said Vinod Agarwal, director of the Economic Forecasting Project and professor of Economics at Old Dominion University's Strome College of Business. "At some point they will start to increase again."

Production and demand

Gas and oil is considered a commodity product — meaning as soon as demand increases, so does the price of the product. But if demand softens, prices tend to follow.

There are already signs that gas prices could rebound in 2016, as the combination of lower production and higher demand is reportedly contributing to a sweeping sentiment that a bullish market could be on the long-term horizon, according to officials with the International Energy Agency.

The IEA estimates that production from non-OPEC countries, such as the United States, will fall to levels not seen in 24 years. Officials with the agency attribute the decline in gas prices to OPEC's continued oil output, despite already relatively low crude oil prices.

Blumling added that as the colder months begin to settle in, refineries are switching over to their winter blends, which on average is cheaper than summer blends.

"The winter blend will be introduced to a number of stations within the next couple of weeks across the U.S.," Blumling said.

With international production showing no signs of slowing and refineries increasing their winter blend capacities, drivers across the Hampton Roads are taking their savings to the bank.

"It's like getting a tax break," Agarwal said of the current pump savings. "The money people are saving at the pump can be used on other goods and services that would have otherwise been used filling their tanks."

Money saved, spent

On average, Agarwal said area drivers are saving roughly $14 every time they cap off their gas tanks. Add that total up every time a driver fills up their tanks under current gas pricing, consumers could net between $28 to $56 a month in savings — money helping to fuel the Hampton Roads economy.

"In many cases, that money consumers are saving at the pump is being spent back into the local economy," Blumling said. "It's money, if saved, that consumers will spend for the holidays."

That's precisely what Baldwin plans to do.

"I hope it continues," she said. "Christmas is coming up and I'd like to save more money for presents."

Meanwhile, at the 7-Eleven up the street, Clayton Cope was taking the temporary decline in gas prices in stride.

Coming from a family familiar with the oil business, Cope said he knows such trends won't last for long.

"Hopefully they'll remain low for a while," Cope said. "I'm saving some money with the lower prices; I think it's good for everyone anytime you get to save some money."

O'Neal can be reached by phone at 757-247-4744.

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