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The Daily Wildcat

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The Daily Wildcat

The Daily Wildcat

 

Low gas prices fuel economic concerns

Tucson+residents+fill+up+their+cars+with+gas+at+the+QuikTrip+on+the+corner+of+1st+Ave+and+Glenn+Street.+
Emily Gauci
Tucson residents fill up their cars with gas at the QuikTrip on the corner of 1st Ave and Glenn Street.

Since Jan. 18, Tucson gasoline prices have dropped 6 cents per gallon, according to GasBuddy, a retail fuel pricing aggregate. This sets local average fuel prices at about $1.81 per gallon, which is 22 cents less than national rates.

Patrick DeHaan, senior petroleum analyst at Gasbuddy, wrote in a press release that U.S. motorists will have another week of gas prices averaging about $1.99 per gallon. He further explained drivers shouldn’t expect that to last, especially as we approach summer months.

The stray gas pumps that hug the corner of Park Avenue and Sixth Street may fuel memories of economic debate, even though their wells dried almost 10 years ago.

The initial deposit for reestablishing fuel service is expensive, and the investment wouldn’t provide many benefits for the independent operation, said Trina Lombardy, a Metro Wildcat sales associate. Lombardy has worked at the retail location on and off for the past three years.

“I don’t know if it would be a detriment to us to get gas here or if it would actually help us,” Lombardy said.

Lombardy said she hopes gas prices remain low for another three years, because inexpensive prices at the pump dictate the elasticity of her monthly budget.

“[While] this year will still feature far lower prices than last year,” DeHaan said, “we’ll be subject to a seasonal lift in gasoline prices as refineries slow production to do maintenance and to make the progressive switch over to cleaner burning summer gasoline.”

Members of the Organization of Petroleum Exporting Countries refuse to yield their pace of crude oil production, which has pitted U.S. producers against its foreign counterparts. This commodity has reached its lowest selling value since 2009.

Additionally, while motorists continue to consume inexpensive fuel throughout the U.S., economic experts are worried about the long term effects cheap gas may have.

MarketWatch, the Dow Jones & Company investment publication, reported that a new survey released by investment professionals claims “the price of oil is about $17 a barrel away from signaling that a global recession is inevitable.”

Some energy-related experts have speculated that OPEC is intentionally driving gas prices down in order to make alternative fuel investments less attractive, said Anita D. Bhappu, associate professor at the UA’s Norton School of Family and Consumer Sciences. Bhappu previously worked as a product development engineer focused on customer interactions and service delivery at Procter & Gamble.

She said many economists assume U.S. motorists saving on gasoline will spend that money in different economic markets, even though consumer spending figures suggest differently.

“We don’t see a huge increase in consumption that would suggest they’re putting that money back into the consumption market,” Bhappu said.

When looking at retail sales during the 2014 holiday season and considering the amount of debit consumers hold, reinvestment speculation appears premature, Bhappu said.

The economic impact regarding lower gas prices can be modestly described a multifaceted topic. While some motorists may spend the money they are saving on gasoline, many have forgotten a similar decline the U.S. experienced six years ago, said Sabrina V. Helm, associate professor at UA’s Norton School of Family and Consumer Sciences. Helm instructs classes in marketing strategy and is also involved in research regarding consumer behavior and sustainable consumption. “People will maybe start spending differently, because they know they budget less for gas in the long run,” Helm said. “But, if it comes to looking at the gas prices, people have a very short memory.”

Conversely, Lombardy talked about acquaintances who have stockpiled gas. She mentioned how rarely she strays from her work commute when prices soar. Saving on gas determines the quality of her meals, Lombardy said.

“It’s a matter of being able to go somewhere, and sometimes it’s even a matter of budgeting my groceries,” Lombardy said. “I don’t think the government realizes what an effect it really does have on a lot of us.”

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Follow David Del Grande on Twitter.

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