More states seen to revel in cheap gas prices

Current crude oil prices have tumbled, and this has slashed the cost of gasoline in some states. While the national average registered at $3.61, some forecast that it will drop some more in the coming weeks.

Cheaper gas prices have given consumers some hope that there’s more money to save now than many months back. A few states have seen gas prices go down to $2.99, and more are looking forward to seeing the same trend in their areas.

While this seems very positive, there’s also a snag – lower crude prices, coupled with cheaper pump prices of gas, could spell sluggish global economies.

Just a few days ago, crude prices dipped by almost 4 percent amid reports of growth in unemployment as well as decline in oil demand and economic activity. The rate of unemployment went up to above 8 percent.

West Texas Intermediate (WTI) went down to $83.23 a barrel – the lowest since October of 2011.  Brent crude oil prices per barrel dropped to 98.43 – a level not seen since the first month of 2011.

AAA announced that pump prices dropped by almost 5 percent last month. This constitutes the biggest monthly drop since mid-fourth quarter of 2011. For some U.S. drivers, this is one piece of good news that could somehow downplay the prevailing dearth in job opportunities.

Among U.S. states, South Carolina is the one with the least tax imposed on gas sales.  RL Jordan Oil President Dan Durbin stated that their company was able to drop prices to less than $3.00 a gallon, because of favorable wholesale prices.

According to Durbin, Jordan Oil’s gas stations along with other gas firms may drop pump prices as soon as they are able to dispose of their higher-cost gasoline supplies.

Oil Price Information Service’s Chief Analyst Tom Kloza’s mentioned that gasoline prices could hit below $3 in Missouri, Georgia, and Oklahoma in the coming days. Residents of Tennessee, Alabama, and Mississippi may soon enjoy the same cuts in gasoline prices, according to a U.S. website.

Kloza forecasts that, come Father’s Day, the cost of gasoline may average at $3.50 a gallon or even lower, nationwide. Residents from the West Coast may enjoy bigger price cuts compared with other states earlier mentioned.

Kloza did not disclose any short term trends in crude oil prices, however, he did mention that gas prices may become steady in a month or two.

Price Futures Group analyst Phil Flynn points out that prevailing cheap gas can be psychologically uplifting, but opined that if unemployment rates fail to decline, this positive outlook would definitely subside.

Flynn said “If you don’t have a job, it doesn’t matter if gasoline prices are $5 or $2 a gallon”.

By: Chris Termeer