US gasoline prices hit four-year low after drop in oil futures

Source: By Reuters • Posted: Wednesday, October 8, 2014

U.S. gasoline prices are the lowest in four years following a drop in crude oil futures, the nation’s largest motorists group said.

The average price at the pump dropped to $3.33 a gallon on Thursday, down 10 percent from this year’s high, and the lowest for the month of September since 2010, according to the AAA.

With crude oil futures hitting their lowest levels since 2012 on Thursday, the price at the pump is expected to fall even further. AAA is forecasting the national average for gasoline will drop below $3 in the coming months, rivaling 2009 prices.

“We are seeing prices go down for a number of reasons. It’s the end of the summer season, and there’s a huge amount of domestic production that is helping drive crude oil prices down, and there were no hurricanes,” AAA spokesman Robert Sinclair said in a telephone interview.

The drop at the pump is not only good news for consumers, said Jeff Lenard, vice president of strategic industry initiatives at the National Association of Convenience Stores.

“The margins for retailers get wider when gas prices go down and the margins get more narrow when prices go up,” he told Reuters, noting that the wide margins are short-lived because of stiff competition.

The current margin of about 26 cents a gallon, which is a gross margin and not profit, reflects dropping gasoline prices.

Lenard added that retailers benefit from consumers spending less money on gasoline and more on items such as potato chips and soda, which have higher margins.