Buyers find some relief from economy at pump

November 13, 2008|By Michael Dresser and Hanah Cho | Michael Dresser and Hanah Cho,michael.dresser@baltsun.com and hanah.cho@baltsun.com

Jobless figures are rising. Earnings reports are dismal. The auto industry is on the brink. But Marylanders are taking some comfort in a plunge in the price of fuel - including gasoline that has fallen under the $2 mark for the first time in 3 1/2 years.

As of yesterday, the average price of regular gasoline in metropolitan Baltimore had fallen to $2.11 after a 2 1/2 -cent overnight drop, according to AAA Mid-Atlantic. Some stations were selling the fuel for as little as $1.91. The statewide average was down to $2.19, propped up by generally higher prices in suburban Washington.

The drop comes as a welcome - and generally unexpected - relief for motorists who were paying more than $4 a gallon at the peak of the market last summer. Marylanders who use natural gas and heating oil to heat their homes may also get a break.

So far, there appears to be no end in sight to the slide as the worldwide economic slowdown takes its toll on the price of crude oil. The price of a barrel of crude dropped $3.50 on the New York Mercantile Exchange yesterday, closing at $56.16. As recently as this past summer, it was almost $150.

Meanwhile, wholesale prices for coal and natural gas have fallen by half since July. Even wholesale electricity prices are down by about a fifth.

At a Royal Farms gas station in South Baltimore, customer after customer expressed delight at seeing gasoline prices cut to a price they never thought they'd see again.

Bobby Gosnell of Southwest Baltimore had a slight mishap yesterday as he topped off the tank of his gargantuan Ford Expedition, but he wasn't crying over spilled gas - not with the price at $1.97 a gallon.

Gosnell said that the last time he bought gas for his SUV, the price per gallon was $3.78 and the cost of filling up was $95 to $100. He said he kept the gas-guzzling vehicle imprisoned in his garage for months before letting it out within the past two weeks.

For most of the summer and fall, he's been getting around in his fuel-efficient but much smaller Volkswagen Passat.

"It's just so small. It's like being stuck in a box. It's like riding a scooter [compared] to riding a Harley," he said.

Now he's happy to have his "baby" back on the road because "I like something big."

The Royal Farms was one of three stations at the hyper-competitive corner of Patapsco Avenue and Potee Street to offer gas for less than $2 a gallon. Other bastions of bargain gas could be found in Pasadena, White Marsh, Glen Burnie and Essex, though prices of $2.20 or more were still common in central Baltimore and always pricey Columbia and Ellicott City.

For truck driver Kenneth Bull, the most important price on the Royal Farms sign wasn't the $1.97 gas but the $2.77 diesel. He said he was paying as much as $4.85 last summer to fill the 250-gallon tank on his 2001 Peterbilt.

"I just scraped by somehow," he said, by scrimping on spending at home and changing his driving habits to make sure he always took the shortest route from Point A to Point B. Though prices are lower, he said he hasn't returned to his old ways because business is "still hurting."

Heating oil prices have also fallen in recent weeks as winter approaches. The average price nationally of residential heating oil dropped to $2.99 a gallon last week, compared with $3.66 a gallon early in October, according to the Energy Information Administration, which collects data during the October-to-March heating season.

Wholesale prices nationally fell to $1.82 a gallon yesterday, down from $2.21 a gallon a month ago, according to Bloomberg News. But it may be a while before consumers see home-energy savings. Baltimore Gas and Electric and other utilities have already bought much of their energy for the coming year. Many heating-oil customers have filled up for the winter or signed deals at higher prices.

Peter Horrigan, president of the Mid-Atlantic Distributors' Association, which represents heating oil and gasoline dealers in Maryland, Delaware and Washington, said heating oil costs have not fallen as rapidly as retail gasoline prices because of slower inventory turnover.

Many heating oil companies offer customers different payment programs to help them save money. Horrigan said some offer cap programs, which set a maximum rate that consumers will pay. So when prices fall, customers will pay the lower price.

"Anyone who got into a cap program, they're doing fine," said Glenna Kinney, distillate and propane general manager at Tevis Oil in Westminster. "They're enjoying what the markets are doing right now."

Customers on fixed-price plans, which freeze the rate for a period of time, may not see the benefits of falling prices. Spot prices have fallen so far, however, that it might make sense for heating-oil or natural-gas customers to pay termination charges of $50 or so and shop around for better deals.

Tevis Oil provides heating oil to residential and commercial customers, though Kinney declined to disclose the number of customers it serves or its prices for competitive reasons.

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