A price war at two gas stations has resulted in what only recently would have been a pipe dream — gas below $2 a gallon.
The Stewart’s and Cumberland Farms convenience stores in Palatine Bridge were selling unleaded gasoline for $1.95 a gallon late Wednesday.
Stewart’s spokesman Tom Mailey attributes the battle to the completion of a nearly yearlong project building a new Route 10 bridge over the Mohawk River between Palatine Bridge and Canajoharie. Southbound traffic had been restricted while the old bridge was dismantled.
“When traffic was flowing again, the competition heated up,” he said.
The two stations began selling gas for the lowest prices in the state, according to GasBuddy.com. The price dropped a couple cents throughout the afternoon on Wednesday.
The average price for gas in the state is $2.37, which is a sharp drop from the $3.09 average last year at this time, according to GasBuddy.
This is still higher than the national average, which is $2.02 a gallon — down 74 cents from a year ago.
Customers seem to enjoy the change. “I haven’t heard anybody complain yet,” Mailey said.
Cumberland Farms spokeswoman Christen Graham said simply, “Cumberland Farms makes a point to price competitively at all times.”
While these two stations represent the lower extreme, the dramatic decline in crude oil has contributed to decreasing gas prices. The price peaked in July at about $140 a barrel and on Wednesday the price was around $53.
Despite the drop at the pump, drivers don’t seem to be putting the pedal to the metal.
The AAA forecasts that 33.2 million Americans will drive 50 miles or more over Thanksgiving, which is a decrease of 1.2 percent from last year at this time.
AAA Northway spokesman Eric Stigberg said this is the fourth major travel holiday this year where AAA has forecast a decrease in travel. The others were Memorial Day, Independence Day and Labor Day.
“The last three we can blame on gas prices. We can’t blame that on the gas prices this time. People are nervous about traveling — that extra disposable income they’re not willing to use on travel,” he said.
Stigberg said AAA started to notice a fall-off in travel once gas started getting in the $3 range last November. He said that if the economy recovers and these prices stay, people will increase their driving. He added that the $2.50 to $3 range seems to be the magic number at which people start to modify their behaviors.
Kajal Lahiri, professor of economics at the University at Albany, also thinks people will resume their old behaviors when gas becomes less expensive. He estimates that the price of gasoline would fall further to $1.50.
Lahiri said there were two factors that drove up the gasoline prices during the last seven years. Demand was high in this country and around the world. Then, there were speculators, who he estimated may have contributed to 80 percent of the price increase.
When the financial crisis hit in September, demand collapsed and burst the speculative bubble. The real estate bubble also burst and crashed the American and world economy.
Lahiri said demand will come back, and after dropping below $2, gas would reach that level again and higher.
However, he said the U.S. government should show leadership to wean the Americans off their energy consumption.
“The memories are still fresh with the painful experience of gasoline and if they push now about energy conservation … people will understand,” he said.
For example, Lahiri said politicians in Europe never let gasoline prices drop too low because they impose higher taxes that are used for mass transit. “That’s why they have so much public transportation,” he said.