Gas prices drop in Caribou: how low will they go?

    CARIBOU, Maine — During the month of August, Maine has enjoyed a significant decrease in the state’s average gas price, and according to GasBuddy.com, the price is expected to keep falling.
“The national average has now dropped to its lowest level since February, and with the end of the summer driving season nearing, we’ll likely see gas prices continuing the downward trend,” said GasBuddy.com Senior Petroleum Analyst Patrick DeHaan.
“Oil prices last week dropped to $95 a barrel briefly before rising the next day back to $97 a barrel, but the important factor is that prices remain under triple-digits. For motorists, we’re nearing the point that gasoline demand drops — after Labor Day — along with the upcoming switch back to cheaper winter gasoline, which will also put downward pressure on prices in mid-September. While a short-term increase in gasoline prices is never out of the question, as we grow nearer to September, the likelihood of a spike decreases. It won’t be long before we’ll start to see a few cities seeing averages under $3 a gallon — areas of Tennessee and South Carolina are already getting close,” DeHaan said.
The falling gas prices this summer are enough to give some drivers whiplash. We’re used to the oil companies raising prices during the busy summer driving season, and with all the turmoil in the Middle East, you would expect to be breaking records in the opposite direction. What gives? How low can they go?
The average retail gasoline prices in Maine had fallen 2.9 cents per gallon in the past week, averaging $3.50 per gallon, as of Aug. 25, according to GasBuddy’s daily survey of 1,228 gas outlets in Maine. This compares with the national average that has fallen 1.3 cents per gallon in the last week to $3.43 per gallon.
Including the change in gas prices in Maine during the past week, prices on Aug. 25 were 17.2 cents per gallon lower than the same day one year ago and are 16 cents per gallon lower than a month ago. The national average has decreased 10.3 cents per gallon during the last month and stands 10.5 cents per gallon lower than this day one year ago.
This news comes as a pleasant surprise for Mainers, as the state just recently neared record highs for gas prices during July, especially amidst the July Fourth weekend, the holiday that often coincides with the highest prices at the pump of the entire year.
The average gas price in Maine during the July Fourth weekend was $3.75 per gallon, up from $3.67 during June and up from $3.56 in July 2013. In July, Maine was slightly above the national average of $3.67, according to AAA’s daily fuel gauge report. The gas price during July was one of the highest ever for a July Fourth weekend in Maine, but still short of the record $4.12 Mainers paid in July 2008.
Despite all indications toward a steady elevation in fuel prices, the latter stages of August have seen a dramatic decrease in prices. In Caribou, the average price for a gallon of gas is $3.59. This is still up nine cents from the state average, but as fuel consumers in northern Aroostook County were getting used to prices closer to $3.70 per gallon in July, the decrease of approximately 10 cents is a welcome sight.
Gas prices pushed higher after June 10, when the city of Mosul, Iraq, was seized by insurgents. The civil unrest that followed in Iraq affected crude oil prices, ultimately causing retail prices to go up. Crude oil prices started to go down in the week leading up to the holiday weekend, but did not immediately translate into falling gasoline prices.
As of Aug. 26, the Gulf station on 117 Bennett Drive, the Citgo on 89 Bennett Drive, the Irving Circle K on 35 Bennett Drive, the Shell station at 89 High Street and the Shell station located at 669 Main Street  were still all selling a gallon of gas for $3.59. With the price of gas in northern Maine frequently sold at a higher price than in the southern half of the state, this relief at the pump is no doubt saving money for northern Mainers.
One gas station has even been selling gas for $3.57 per gallon for the past week or more. Leo and Sons Citgo, owned by brothers Dale and Scott St. Peter has been selling their fuel for two cents below the town’s average, but still aren’t quite sure what’s caused the sudden drop in price.
“The market’s been going down,” said Dale. “Someone asked me the question yesterday regarding why the price has gone down despite the conflict in the Middle East, but there’s no rhyme or reason sometimes. I did hear that the reason the price is going down is because they’re pulling off the reserves, so when they run out of that the price may start to go back up.”
St. Peter explained that it’s not just gas that’s dropped in price, but fuel in general has decreased across the board, with diesel fuel being sold for between $3.89 and $3.91 per gallon.
“You would think, with Labor Day coming up, the price of fuel would be going up,” said St. Peter. “It’s not just gasoline that’s going down, but Diesel fuel and I believe regular fuel has dropped in price as well. So, it’s the market.”
As to why the price for a gallon of gasoline in Aroostook County is still significantly higher than parts of southern Maine — even as close as Bangor — there’s a fairly straightforward answer to that as far as St. Peter is concerned.
“There is, of course, the transportation fee,” said St. Peter. “I don’t know exactly how much that is, I think it varies between distributors, but I’d say that has to add at least 10 cents to the price per gallon. It may also have something to do with volume. If you look at the traffic in the Bangor area compared to here, the competition alone is enough to drive down the price. Some places down there sell a tanker every day. It takes us four or five days to sell that much.”
“With Labor Day right around the corner, most Americans will be seeing the lowest prices of the summer,” said DeHaan. “And the good news doesn’t end there. The national average is at its lowest levels for this time of year since 2010, when prices averaged $2.65 per gallon nationally during Labor Day weekend. While most Americans won’t have access to gas prices below $3 per gallon, a few hundred gas stations, mainly in the southern U.S., will be dropping below that mark. For those motorists in areas where gas prices tend to be high, the good news is just 1.5 percent of gas stations in the U.S. are selling for more than $4 per gallon, so even California is in on the party at the pump,” DeHaan said.