Just in time for the Christmas shopping season, gas prices have dipped below $2 a gallon at some Baton Rouge warehouse clubs.
“This is the right time of the year for it,” said Susan Blackwell, of Denham Springs, who was filling up her 2013 Ford F-150 at Costco around lunchtime Thursday. At that time, a gallon of regular gas cost $1.99 for Costco members. The truck has a 36-gallon tank, so Blackwell said it was costing her more than $100 to fill up this time last year, when gas locally had an average price of $3.10 a gallon.
“This is great,” Blackwell said. She said it was “crazy” for gas prices to be high and for the United States to import foreign oil when there are ample supplies of fuel in this country.
Near Blackwell at another Costco pump, Hosea Willie, of Tickfaw, said he was “surprised” to see gas prices had fallen below $2 a gallon.
“It’s been a while that the price was this low,” he said.
Gas prices haven’t been below $2 a gallon in Louisiana since April 2009, when the U.S. economy was still mired in the Great Recession, according to figures from the U.S. Energy Information Administration.
“I don’t know how sustainable this is,” said David Dismukes, executive director of the LSU Center for Energy Studies. “Everyone should enjoy it for the Christmas present it is.”
Everyone except the state budget and the energy industry, that is.
Oil prices have plummeted 40 percent since June, and Louisiana has already lopped $93 million from the projected royalties and severance taxes for the 2015 fiscal year. The sliding mineral royalties accounted for more than half of the $171 million in cuts the Jindal administration announced over the next seven months. Those cuts affect road maintenance, public school testing and youth-mentoring programs.
For now, only Costco and Sam’s Club are offering $2 gas.
Both charge significantly less for gas than other Baton Rouge fuel stations because customers must pay an annual membership fee that starts at $45 to $55. According to Gas Buddy.com, while the warehouse stores had gas around $2, the next cheapest price for local fuel was $2.22 a gallon.
The local prices are close to the cheapest prices in the country. Some stations in Oklahoma City dropped below $2 a gallon during the last two weeks, according to AAA. The lowest price there was $1.95 on Thursday, according to Gas Buddy.com.
The increase in domestic crude oil production — the United States is thought to be the world’s largest producer — combined with motorists driving less has resulted in a buildup of “barrels on top of barrels” of crude and refined products, Dismukes said. For the past 12 to 24 months, the markets ignored the screams of producers begging to export oil while hub prices barely reflected the jump in supplies.
“Now it’s like the bottom has fallen out, and everybody’s now figuring it out,” Dismukes said.
Dan Kling, of Prairieville, who was pumping gas at the North Mall Drive Sam’s Club around lunchtime Thursday with a curving line of vehicles behind him, said he wants to see the benefits of lower fuel prices get spread throughout the economy.
“I’m hoping food prices can go down and other consumer prices drop now that we’re paying less for gas,” Kling said.
According to the Brookings Institution, a $1 drop in the price of gasoline saves consumers more than $500 per year.
Yvette Palmer, of Baton Rouge, said the lower fuel prices are giving her more money to spend on other things. “I’m blessed,” she said.