As dark clouds continue to roll in from nearly every corner of the economy, consumers are enjoying at least one silver lining: a precipitous drop in oil prices that has led to gasoline selling in Nashville for an average of $2 per gallon — and often much lower at specific pumps.
Prices haven't been that low in the area since Dec. 6, 2005, and they are down from a record high reached in September of $4.13 per gallon. That translates into more than a 50 percent drop in the price of gas in Nashville in less than two months, following a trend that's playing out across the country.
While tumbling gas prices are a relief for consumers who have been shaken by job losses and declining home prices, economists now fear that the resulting decline in exploration and production by oil companies will lead to a massive price spike when economies rebound.
"In the energy sector it's boom or bust, and now we are seeing the downside," said Dan Flynn, an energy analyst at Alaron Trading Corp. in Chicago. Flagging demand and consumer confidence are the main contributors to falling prices, he said.
Crude oil for December delivery declined $1.10, or 1.9 percent, to $57.14 a
barrel in floor trading on the New York Mercantile Exchange on Friday. Futures touched $54.67 Thursday, the lowest since Jan. 30, 2007. Prices have tumbled 61 percent since reaching a record $147.27 on July 11.
As a result of falling oil prices, gas prices probably will hold through at least the end of the year, analysts predict.
"We have a slump in the economy right now and people are being very cautious," said Jessica Brady, AAA Auto Club South spokeswoman. "There is less demand for (gasoline)."
A second emergency meeting to discuss production cuts that is expected to happen soon among members of the Organization of Petroleum Exporting Countries is unlikely to spark a price increase in the short term.
Even if the respite turns out to be brief, consumers are enjoying the low prices while they last.
"It's an absolute joy," said 43-year-old Patrick Dought ie, as he pumped gas as low as $1.85 a gallon into his Ford Windstar at a gas station in Antioch.
As gas prices spiked over the summer, consumers began to use more fuel-efficient vehicles, drive less and take public transportation. Now, with the lower prices, some analysts said, it's only a matter of time before drivers return to some of their old habits.
Malcolm Getz, associate professor of economics at Vanderbilt University, said that while consumers might become less conscientious about fuel economy than they had been, they probably won't "completely move in that direction."
The amount of people riding some form of public transportation has weakened since the summer. There was a 5 percent decline in the average number of MTA bus trips per weekday to 33,300 in October compared with September, according to MTA, although the volume of riders tends to fluctuate each month.
Driving habits revertAnd Adrian Luna, a 25-year-old construction worker in Nashville, said he is using his 2004 Chevrolet Trailblazer again because it costs $25 to fill the tank now — half of what it cost a few weeks ago.
At the time, when gas prices reached their peak of $4-plus per gallon, Luna said he drove his more fuel-efficient Honda Civic. Now, he drives that car a lot less and the Trailblazer more.
"It's more comfort for my family," said Luna, who is married and has two children.
Aaron Claussen, 18, said he's again offering rides in his silver Hyundai Accent to friends, and is driving his girlfriend around much more.
"I like it," Claussen said as he pumped $15 worth of gas into his car at a Murphy USA station in Antioch, where gas was selling for $1.85 a gallon. "I can drive more and enjoy the teenage life better."
Gas prices could remain low until the first quarter of next year, when the switch to a summer blend of gasoline that has more required additives to help control air pollution will raise prices slightly, Brady said.
Some consumers aren't counting on what now passes for cheap gas sticking around.
David Goodrich, 35, bought a $22 second-hand bike to ride to and from work when gas prices soared. Goodrich said he still plans to use the bike on days when the weather allows it.
"I don't know if it's going to last," he said matter-of-factly of $2-a-gallon gas.
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