Gas prices stay low, often below $3, but change is likely coming

One year ago today, the average gas price was $4.69 per gallon in the Dayton area and $4.75 nationally.

Patrick De Haan, senior petroleum analyst for GasBuddy, which tracks fuel prices, said it isn’t rare for prices to drop Independence Day week. What is rare is that they did so despite retailers’ profit margins being depleted heading into the weekend and wholesale gas prices previously spiking.

“Knowing how retailers work, they’re going to want to make sure that they’re on the right side of the margin,” he said. “Those stations I see in Dayton that are under $3 a gallon, they’re basically not making anything, and so to see a retailer go through the holiday weekend ... without being concerned about the margin being negligible, it’s pretty surprising.”

Credit: Bill Lackey

Credit: Bill Lackey

This week the market gained “a little bit of breathing room” because the wholesale price of gasoline has reversed and fallen for a couple of sessions.

De Haan believes the Dayton market is nearing a price cycle, where stations raise prices 25 to 40 cents a gallon after ignoring minor fluctuations in the market and undercutting each other by a penny or two each day until they run out of margin.

While numerous Dayton-area stations were selling gas for $2.89 Friday, there is always variation in the market, as other local stations have left prices as high as $3.40 per gallon.

“We’re kind of teetering on the edge of most stations not making really enough money to sustain their business, which tells me that we are close to seeing a price cycle, and ... it befuddles me that it’s gone this long,” he said. “Typically, ahead of a holiday when a lot of people are traveling, retailers are not going to go above and beyond and make an egregious amount, but they’re going to want to make sure that they’re not making nothing, either.”

Pump prices barely budged over the past week nationwide, despite the expected demand surge due to the holiday, AAA said. Statewide and in the Springfield and Dayton regions, prices dropped 9, 12 and 18 cents, respectively.

“Gas prices may rise over the next few days based on slightly higher demand,” said AAA spokesman Andrew Gross. “But it could be more of a blip than a trend, and demand may retreat once the holiday is further in the rearview mirror.”

AAA predicted that more than 43 million people would hit the road to celebrate the nation’s birthday earlier this week, with 2 million people of those coming from Ohio and nearly 168,000 coming from the Dayton metro area. Despite the record number, the national average for a gallon of gas dipped a cent lower since last week to $3.54.

“For now, gasoline demand will likely ramp up as we enter the peak of the summer, with millions of Americans set to take to the roads with some of the season’s lowest average gasoline prices,” De Haan said earlier this week via the GasBuddy blog.

Staff Writer Lillian Wolford contributed to this report.