Gas falls below $2 a gallon in Havasu

Gasoline prices in Lake Havasu City have broken through the $2-a-gallon threshold with some stations offering self-serve regular unleaded gasoline from $1.97 to $1.93 a gallon Friday.

At least one local station owner dropped the price 20 cents from $2.17 to $1.97 a gallon overnight. A move that was an anomaly and a far cry from the average statewide overnight decrease of 4 cents a gallon to $2.154, according to AAA Arizona.

Gas prices have been steadily dropping the last several weeks, said Michelle Donati, a spokeswoman for AAA. The average price for regular dropped nearly 20 cents a gallon statewide from last week, she said.

The last time Arizonans saw gas at $2.15 a gallon was March 2005, Donati said.

The average U.S. price of regular gas dropped 2.07 cents overnight Thursday to $2.02 a gallon, according to the AAA daily price survey. The number of states that were averaging less than $2 has grown to 23 from 15 since Monday, according to the same survey.

The last time the national average was below $2 a gallon was February 2005, at a price of $1.91 gallon according to the Energy Information Center.

Consumers are getting relief at the pump as a result of falling crude oil prices. The slumping economy and less demand have pulled down the price of crude, which plunged $4-a-barrel, to closed at $49.62 Friday.

Phil Flynn, vice president and senior market analyst for Aaron Trading Corp. in Chicago told the Los Angeles Times that the oil market was looking for Congress to agree on an auto industry bailout package that would keep autoworkers employed and help stabilize demand.

“Instead, it was all high-stakes politics over committee chairmanships. People voted for change, but I don’t think this is what they had in mind,” said Flynn, who predicted that oil could drop as low as $35 a barrel if it ended the week under $50.

John Kilda, vice president for risk management for MF Global in New York, blamed the gloomy global economic picture and consumers who were holding onto their money despite sharp fuel price drops, the Times reported. He said oil could hit $40 a barrel or lower.

“It’s just been a complete about face. Add in the jobless claims reaching a 16-year high and even $40 a barrel starts to look tenuous,” Kilda said.

But Joe Hahn, an assistant professor who does energy price modeling at Pepper dine University’s Garside School of Management, said oil’s downward spiral could reverse as the global economy recovers next year and boosts energy demand, taking oil back to $80 or $90 a barrel, according to the Times.

“Before, it was the speculation of demand outpacing supply that sent oil rising,” Hahn said. “Now, it’s the speculation that supply will outpace demand at is driving the market.”