Monday, February 22, 2010

Nashville gas prices drop, but decline is not expected to last long

Nashville-area drivers enjoyed a 17-cent decline in the price of regular gasoline, at an average of about $2.49 a gallon on Friday compared with a month earlier, but that respite is probably just a temporary blip.
Higher prices are coming this summer, according to AAA Auto Club South.

Consumers such as Terry Warrick, owner of Terry's Flooring Service, welcomed the news of lower prices but would like to get gas cheaper.

"Every little bit helps, but it is still high," Warrick said, as he pumped $2.47- a-gallon regular gas into his Ford club wagon at a Swifty gas station in East Nashville.

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Warrick might be disappointed in the months ahead.

The slight decline in gas prices could be because of the recent strengthening of the U.S. dollar, causing investors to stray from putting money on crude oil, said Jessica Brady, a spokeswoman with AAA Auto Club South. However, on the week ending Feb. 14, crude oil prices began increasing, Brady said.

With refineries soon switching to fuel blends for the summer that are costlier to make, along with other factors, gas prices could peak this summer at $3 a gallon, she added.

Warrick said if gas prices get higher, it will be financially painful to fill up his car, because his business is down 60 percent and he still needs the same amount of gas for work.

Others say they can barely get by paying for gas at its current price. Michael Schoen enberger, who was laid off from his job making cake decorations in September, paid $15 for six gallons of gas in his Saturn to fill the empty tank just enough so he could attend his apprenticeship, get food for his family and buy diapers for his 10-month-old daughter.

"I'm unemployed, so pretty much every cent counts," Schoenenberger said. "You got to watch that gas tank."

Despite increases in gasoline prices this summer, some analysts say they expect U.S. travel to improve because the heavy discounting by hotels, airlines and car rental agencies is likely to entice customers.

U.S. travel spending by domestic and international visitors for leisure and business is expected to increase 6 percent to $748 billion in 2010 compared with last year, according to research firm Mintel. But that's still much lower than the 2008 level of $772 billion.

"Maybe now the package deal will be so low you are going to be willing to spend," said Mark Guarino, a Mintel analyst.

Wendy Lee can be reached at 615-259-8092 or

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