S.C. gas prices dropping, but less than in some states
What the drop has been, and where
Price declines in the past month for a gallon of regular unleaded gas:
Nationwide average: Down 16 cents, or 4 percent
South Carolina: Down 12 cents, or 3 percent
North Carolina: Down 12 cents, or 3 percent
Georgia: Down 9 cents, or 2 percent
Florida: Down 8 cents, or 2 percent
Michigan: Down 36 cents, or 8 percent
New York: Down 9 cents, or 2 percent
Lowest prices in Charleston on Wednesday:
$3.71: Murphy USA, 3969 West Ashley Circle & Bees Ferry Road
$3.71: Costco, 3050 Ashley Town Center near U.S. Highway 17
Jeff Hemphill recently heard from a colleague visiting Michigan that gasoline prices there had dropped dramatically in recent weeks — 30 cents or more a gallon.
But when he looked at the pumps here, he saw a much less satisfying decrease.
What gives?
Nationwide, gas prices are dropping, about 16 cents, or 4 percent, during the past month, according to GasBuddy.com, a price-tracking service.
Michigan peaked at $4.17 a gallon on average, and is now at $3.74; South Carolina topped out at $3.86 on average, and now is at $3.74.
Some areas, such as Michigan, have seen drops of well over 30 cents.
Other states have had much smaller declines, ranging from 12 cents in South Carolina to just 8 cents in Florida.
One reason for this decline: It's getting too expensive to drive. As gas prices soared past $4 a gallon, American motorists drove less, 9.6 billion fewer miles in May compared to the same month last year, according to the U.S. Transportation Department.
Another reason: Crude oil has dropped more than $20 a barrel.
But why are gas prices going down at different rates across the country?
One possible factor: Demand for gas in South Carolina is stronger than ever. Although fuel consumption is down nationally, demand here continues to increase, despite record fuel prices.
In May motorists bought 222 million gallons in South Carolina, up a whopping 21 percent from the same month a year before, according to new state Department of Revenue figures.
The state's growth is mainly responsible for the increase in consumption, said Danny Brazell, the department's public affairs officer.
Carol Gifford, public relations manager for AAA Carolinas, speculates that states with higher prices are seeing steeper declines.
"South Carolina, even as gas prices escalated, always had the cheapest or close-to-cheapest gas in the nation."
Gasoline in South Carolina has dropped 10 cents in the past week and a half, while the price has dropped 13 to 15 cents in North Carolina, according to her figures.
She said gasoline analysts are predicting lower prices in the short-term as speculation in crude oil declines and people drive their cars less. The bottom line: "No matter what the reason, any time we see a price decrease, we're happy."
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Comments
This article has 19 comment(s)
Posted by iceman1978 on July 31, 2008 at 1:16 a.m. (Suggest removal)
There will always be a delay in the drop in gas prices from the drop in oil prices. Let's say you're an oil company and you're purchasing oil from brokers in Saudi Arabia in the first week of August when oil is at $125 a barrel. After you ship the oil here you have to send it to a refinery and then into your distribution apparatus. If oil prices are lower the next week, then gas prices will drop once the oil that was purchased at the higher prices of the first week have made their way through the markets.
I've been saying for a long time now that oil prices will never decline unless the dollar gains value relative to other currencies. When the dollar declines oil will go up because investors use it as a hedge against inflation. Even if the Dollar and the Euro were more in balance again it wouldn't translate into $1 gas again. The best that we can hope for would be for gas to get in the range of $2.50. The rates of increasing production are not able to keep up with the increase in demand for oil.
Posted by Neponset on July 31, 2008 at 6 a.m. (Suggest removal)
It’s a little disappointing to see SC year over year consumption of gas is up 21% for May, I would have thought it would be down with a lot of folks trying to use less, I have been using less - maybe I am part of a small minority.
As for pump prices not following spot market prices in lock step, it is my understanding that big oil buys on longer term contracts, which avoids these short term price swings.
Posted by drp7773 on July 31, 2008 at 8:09 a.m. (Suggest removal)
It's also a way for he independent and chain owned gas stations to milk the fine folks for awhile longer. You always here well that price just went down today and we still have gas we bought at the higher price in the tank we have to get rid of first before we can lower prices, buttttttt when the price of a barrel goes up this morning, they run out and raise the prices even though they havent even bought the new high price gas yet.SCREW JOB!!!
Posted by justjerry on July 31, 2008 at 8:36 a.m. (Suggest removal)
drill here, drill now
Posted by ysillyme on July 31, 2008 at 9:31 a.m. (Suggest removal)
Early~
You are right about the prices during the crisis, but don't you think the gas stations are still getting in our shorts on greedy principles?
Posted by ptmama73 on July 31, 2008 at 9:36 a.m. (Suggest removal)
"The state's growth is mainly responsible for the increase in consumption, said Danny Brazell, the department's public affairs officer."
Growth definitely is a factor when looking at the increased use of gas in SC.
http://www.charleston.net/news/2008/jul/...
Posted by ysillyme on July 31, 2008 at 11:01 a.m. (Suggest removal)
Exxonmobil just reported profit of $11,700,000,000,.00 for the quarter!
Posted by creeker on July 31, 2008 at 11:28 a.m. (Suggest removal)
That figure doesn't mean anything. That is what their PROFIT margin is not their actual profit.
The margin has been about 10% for about 70 years, but at 3.70 a gallon that number is going to go throught the roof. South Carolina educations, what a JOKE!!!!!!!!!!!!!
Posted by coastal1 on July 31, 2008 at 1:32 p.m. (Suggest removal)
+1 with Early. Prices have dropped less here because SC already had some of the lowest prices in the nation.
If you zoom out the map at the bottom of this page you can see where prices here fall in line with the rest of the country.
http://www.charleston.net/gasprices/
Posted by VMI90 on July 31, 2008 at 1:59 p.m. (Suggest removal)
Drilling will only marginally lower prices- most of our oil will be dumped on the foreign markets- ie, asia, due to higher demand. Noone seems to get it here- we need to drastically reduce demand, but nobody ever talks about that. Keep driving that ridiculously oversized hummer or suburban. I am more than happy to drive my hybrid and fill up once a month.
Posted by VMI90 on July 31, 2008 at 2:02 p.m. (Suggest removal)
I also do want to hear the argument that it takes a while for prices to drop with a drop in crude- it has only marginally dropped the price in the last few weeks, but if crude goes up, gee, the prices go up rapidly and much more to the extreme.
Posted by iceman1978 on July 31, 2008 at 3:31 p.m. (Suggest removal)
Although petroleum is currently plentiful in supply, and relatively inexpensive to use in the production of electricity; it believed by many that we are approaching the peak oil production level. In economics this is what is commonly known as the Hubbert Peak Theory . The Hubbert Peak Theory states basically that in the extraction of petroleum from oil fields that the rate of production will follow a bell shaped curve. The discovery of oil and the construction of necessary infrastructure in the beginning stages will result in a high yield of production. In the later stages production will decline as the available resources, as well as what is technologically feasible, will decline over the course of time. This is similar to the Law of Diminishing Returns in that continued production becomes more expensive assuming that technological methods remain constant. The only ways in which to prevent are to discover new oil fields, or to develop new methods of technology by which we obtain petroleum. By many standards it is possible, albeit prohibitively expensive, to extract petroleum from seawater.
There are many who believe that we have currently hit peak capacity in global production of oil in that the largest oil fields of Mexico, Saudi Arabia and Kuwait have currently hit their peak production levels. While this is an issue of concern, and should be addressed as one of the legitimate reasons to develop alternative sources of energy; it is important to remember that new oil fields are discovered each year. An example of this would be the discovery of large oil reserves beneath the Gulf of Mexico by Chevron, Devon Energy and Statoil. This discovery took place in the second quarter of 2006, involved drilling to a depth of over twenty-eight thousand feet, and to date was the deepest Gulf of Mexico well test that resulted in success.
Posted by iceman1978 on July 31, 2008 at 3:32 p.m. (Suggest removal)
The recent increase in oil prices have come about as a result of a combination of economic factors. The first and foremost of reasons is a combination between the growing demand for petroleum in markets such as China and India, and the decline in the value of the US Dollar relative to the Euro and other currencies. The latter of these two will likely prove to be a temporary situation in that the US Dollar will eventually regain its value, particularly if recession hits in other nations. Anyone who remembers the eighties would know that many predicted that the Yen would be the dominant currency worldwide by the year 2000. At the time people couldn’t have anticipated the downturn in the their economy, caused in part from protectionism and a real estate bubble. A similar situation exists with the Dollar and Euro considering that the EU nations are still very export driven and tend to be more protectionist than the United States. While it is indeed possible that the Euro will remain the stronger of the two currencies into the foreseeable future, I believe that the Dollar will regain some of its value to restore a balance between the two.
The growing energy demands of the emerging markets of Asia is something entirely different, much more long term, and will eventually come to a head when economic growth grinds to a halt due to rising energy prices. This could in fact, prove to be the moving force behind the switch to renewable energy. In China alone the market for automobiles is growing at a rate in the double-digits for the past five years. The electricity production of China has grown at a rapid pace as well, placing China second only to the United States in total output. Indeed, just the use of coal for energy needs increased by 15% in 2004. One must also consider that petroleum is used for much more than transportation. Plastics and the production of electronic goods are also dependent upon petroleum, and the phenomenal growth in the market for personal computers and other electronic devices has only contributed to this part of the demand. There is also the issue here in the United States that our refining capacity is unable to meet our demand for gasoline. Our capacity to refine oil is currently in the neighborhood of seventeen million barrels per day, while our need for gas is well over twenty-million barrels per day. The shortfall in gasoline must then be bid for on the international market, which drives prices of refined petroleum even higher. In addition to this, we haven’t built any new refineries since 1976. Under conditions such as these, considering our growing energy needs as a nation, did people expect the outcome to be any different?
Posted by iceman1978 on July 31, 2008 at 3:33 p.m. (Suggest removal)
A second factor to consider in the rise in oil prices are the recent events which have taken place in the Middle East; the war in Iraq being a particular factor as it caused a temporary disruption in the flow of oil from Iraq. According to the CIA Iraqi oil production as of 2002 was 2.093 million barrels per day; by 2005 it had dropped slightly to 2.03 million barrels per day. Another reason with regards to the increase in profit margins of the oil industry has to do with the production costs associated with petroleum. Using the Norwegian oil giant Statoil as an example, one must consider that there are variable and fixed costs in the extraction, shipping and refinement of petroleum; as there are costs with the production of any economic good. The first is going to be the fixed costs of the utility bills for facilities as well as the mortgage or lease on the equipment. The next factor are the variable costs such as labor, and the expenses with the extraction of petroleum, which ties into the Hubbert Peak Theory as well as the level of technology used by an oil producing nation. When one is using outdated equipment, as is the case with Iran, the cost per barrel increases as they have to drill deeper. This is the main reason why Iran wishes to have a greater political role in the Middle East as they would want to have oil production, and prices, to be governed more in line with the wishes of the Iranian government.
Posted by iceman1978 on July 31, 2008 at 3:34 p.m. (Suggest removal)
The next cost is involved in shipping. Using Norway as an example, it would be less expensive for them to pipe oil into Sweden or ship it into Germany or France, as opposed to shipping oil across the Atlantic Ocean to the United States. One must also consider that when shipping oil long distances that they must use oil tankers that would dwarf even the biggest of ocean liners. The reasoning behind this can be found in economies of scale, which works like mass production. The more petroleum you can ship in a single load, the less cost per unit. Many oil tankers are so massive in scale that they can barely fit through the Panama Canal. The Panama Canal, in all of its grandeur, was constructed in a time when people couldn’t have conceived of the size and scope of ships that we use today. This would explain a lot of the reasoning as to why Venezuela (or Mexico and Canada for that matter) export much of their oil into the United States, as well as why Hugo Chavez would stand to lose money if he were to sell exclusively to China or India as both nations are nearly four times the distance in shipping. If Hugo Chavez were to sell his oil exclusively to China and India, it would not affect the amount of money he receives for his oil. The price which he receives is going to remain at whatever the market will bear, regardless of any increase he may have to pay in shipping costs. What it would mean however, is that the oil which he supplies to China is oil which they were previously purchasing elsewhere, such as Saudi Arabia. The Saudis would, in turn, find new customers to buy their oil.
Posted by Invisible_Hand on July 31, 2008 at 4:29 p.m. (Suggest removal)
---VMI90---
I'm sorry but I do get "it" and would like to try to share "it" with you.
Two points of clarification for you that may help:
1. There are no "foreign markets-ie, asia". Oil is bought and sold on a global market. Not different markets here and there, one international marketplace.
2. If you think that reducing demand will decrease price, then how do you not come to the same logical conclusion about increasing supply. Don't they do the same thing? The fact is they do, whether you shift the demand curve left or the supply curve right, you're going to cause prices to decrease. You, it seems, are just choosing one over the other based on emotions and not economic fact.
Also:
1. Enjoy saving money on your hybrid....4 years from now. Since that is the average length of time before a hybrid owner begins to have any economic benefit.
2. Pull your head out of your ass and help fight environmental destruction like me. Don't drive a hybrid. I choose not to for many reasons, one being there is no safe way to dispose of the toxic batteries. I'm a logical thinker and choose not to based on fact while you choose to based on theory and emotion.
Posted by I_Love_d_Peninsula on July 31, 2008 at 5:35 p.m. (Suggest removal)
After we went into IraQ, I was sure gas would be .50 cents a gallon.
We were Bushwhacked!
Posted by FiscalConservative on August 1, 2008 at 6:24 a.m. (Suggest removal)
Posted by I_Love_d_Peninsula on July 31, 2008 at 5:35 p.m. (Suggest removal)
After we went into IraQ, I was sure gas would be .50 cents a gallon.
We were Bushwhacked!
No, you are just not bright. And Congress has done more than the President on this issue.
Posted by VMI90 on August 1, 2008 at 10:46 a.m. (Suggest removal)
Invisible hand- nice name calling- often the last refuge of the person that loses an argument. You probably do much less to reduce pollution and waste than I do, so before you accuse me of anything, take a look at yourself, junior. You don't know me, so back off, jack.