Issue date: 10/20/08 Section: News

Media Credit: Kim Acheson Gas prices in Eau Claire are dropping at stations such as the Bridge Stop, 3019 N. Hastings Way. "I know people are filling up more now than they were when it was $3 or $4 a gallon," said Tiffany Reed, an employee at Bridge Stop.

$37.

The pump stopped at about that price when junior Tyler Gudex filled up his gas tank last week at $2.99 per gallon.

Drivers filled up their tanks for under $3 per gallon in Eau Claire early last week, and prices have continued to drop in the area.

Gudex was happy to fill up his gas tank at about $37, he said, instead of the usual cost of about $10 more.

"Lower gas prices really help when I go home for the weekend," Gudex said. "I live in West Bend, which is about four hours away."

Economics professor and department chair Wayne Carroll said the reason for the price drop lies in ordinary supply and demand factors. When gas is in high demand, the price goes up, when it's not, the price goes down.

One of the biggest factors is the price of oil, Carroll said.

"If the price of oil goes down … it reduces the price of producing gas," he said.

Carroll listed several other factors contributing to the price drop, including the weakening economy.

"If there's a serious downturn or recession, economic activity is going to slow down," Carroll said.

Carroll said last summer's hurricanes threatened oil refineries along the Gulf Coast, causing a spike in gas prices, although the damage was not as widespread as some thought.

"A lot of oil refinery capacity was shut down - they thought it might get hard hit," Carroll said.

Much of the oil capacity is just coming back online now, Carroll said, and that has increased the supply of gas in the last month or so.

Carroll said there is a good chance gas prices could stay low or continue to drop in the short-term. With prices dropping significantly, we might expect people to start purchasing more gas again and driving their cars more, Carroll said, but the threat of a recession means the opposite.

Continued...

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