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Cheap gas is back

March 10, 1998|By BRENDAN KIRBY

Cheap gas is back

Falling oil prices worldwide have led to record low prices at gas pumps throughout the Tri-State area and across the country, and experts said long-term forecasts are good for motorists.

Adjusted for inflation, gas prices are lower than they have been for a long time, according to analysts who track prices.

"We are back to nearly pre-embargo prices when you consider inflation," said Henry R. Linden, director of the Energy and Power Center at the Illinois Institute of Technology.


For motorists, that means fatter wallets.

"The cheaper, the better," said Boonsboro resident Robin Dagenhart, who was filling up her Ford F-250 pickup truck.

Dagenhart, 29, said her truck has two 15-gallon tanks, so a small drop in price adds up to big savings over time.

"Finally, it's back down again," she said.

With the per-gallon price of gas hovering around $1 in many places, Linden said the energy crisis of the 1970s seems like a forgotten memory.

In 1973, oil producing countries of OPEC imposed an oil embargo against the United States. The subsequent gasoline shortage resulted in long lines and high prices at gas stations.

But Linden said the Organization of the Petroleum Exporting Countries controls a smaller percentage of the world market than it did then. New technology has led to increased production in the Gulf of Mexico, the North Sea between Great Britain and Norway and elsewhere.

Linden said the Caspian Sea in the former Soviet Union could lead to even more production.

"That whole Caspian Sea area now looks like it's going to be another Middle East," he said. "We have a whole new production area developing rapidly."

Sharpsburg resident Max Pratt said he has noticed a dramatic difference in price since he began driving two years ago. Pratt, 18, said he always fills his car with super unleaded, which was selling for about $1.25 at the Sharpsburg Pike Sunoco station.

That's about a quarter less than it was at this time last year, he said. Since he does not get reimbursed for gas mileage at his pizza delivery job, Pratt said the decrease makes a big difference.

"As a teenager with part-time jobs, with the minimum wage going up and gas coming down, it gives kids a lot of extra money," he said. "This is saving me a lot of money."

Harry Miller, manager of the Hedgesville, W.Va., Texaco station, said his price for a gallon of regular is $1.08 and falling.

"It was in the teens and it's just been gradually falling," he said.

The price of gas has fallen five straight months, according to AAA.

In Maryland, gas prices have hit a four-year low at an average of $1.11.8 per gallon for regular unleaded gas, according to a February survey by Mid-Atlantic AAA.

The average price for self-serve regular unleaded gas was about $1.07 in both Pennsylvania and West Virginia, according to the February AAA Fuel Gauge Report.

Hubert McCleary, a partner in McCleary Oil Co. in Chambersburg, Pa., said it has been a long time since he could sell gas for less than a dollar. His two Chambersburg-area stations are selling regular unleaded for 99.9 cents per gallon.

"There's something magical about 99 ... There's something magical for the consumer to be able pay less than a dollar," he said.

"If you have three stations in a row and two are at 99.9 and one is over a dollar, the customer perceives the third one is so much more expensive," he said.

Brad Kelley, 31, of Clear Spring, said he often stops for gas in Hagerstown because it is cheaper than at home.

"It's gone up and down. It was up over a dollar for a week or two. Now it's back down," he said. "It makes a difference."

Linden, the oil industry analyst, said several short-term factors have contributed to the falling prices. The Asian money crisis has reduced demand for oil there and the mild winter in much of the United States has led to an oversupply.

In addition, Linden said the U.N. deal with Saddam Hussein will allow Iraq to double its oil production.

While those trends are temporary, Linden predicted that price for gas will remain stable for the next 15 or 20 years.

"Already, predictions of running out of oil or reaching capacity as early as 2005 have been rendered irrelevant by technological advances," he said. "The long-term outlook is good."

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