Dow's down-turn eases pain of filling up at the pump

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By Kurt Allemeier | Tuesday, October 7, 2008 6:11 AM CDT | () comments

Mike Lyon of East Moline drove from Illinois on his lunch hour Monday to buy gas at the Big 10 Mart in Bettendorf. Gas prices are hovering near the $3 mark again in the Quad-Cities after oil costs fell sharply. (Larry Fisher/QUAD-CITY TIMES) Buy this Photo

The souring worldwide economy is causing a pleasant side effect at Quad-Cities gas pumps.

In the Iowa Quad-Cities on Monday, the average price of a gallon of regular unleaded gasoline was $3.14 per gallon for regular unleaded, according to AAA and Oil Price Information Service. Regular unleaded was $3.62 a gallon a month ago in the Iowa Quad-Cities, down from the record high of $4.08 a gallon in July.

For a gallon of regular unleaded in the Illinois Quad-Cities, motorists are paying $3.61, down from $3.76 a month ago, according to AAA. The record high of $4.24 was set July 16.

“Gas prices are going to go where the rest of the economy is headed,” Dave Swenson, an economist at Iowa State University, said. “If the rest of the economy stays weak — we see softening demand and growth, recession in Europe, a drop in demand in India and China — we are going to see prices go down. That is where we are headed.”

That is OK with Quad-Citians filling up on a warm autumn afternoon.

“We need it,” Zeddie McDowell of Davenport said, as he filled up his pickup at the Gas Depot at Central Park Avenue and Clark Street. “If we get to $2, it will be better.”

Oil continued its plummet from close to $150 a barrel at midsummer to less than $90 a barrel Monday, the cheapest it’s been in eight months. On the New York Mercantile Exchange, light sweet crude for November delivery closed at $87.81 per barrel.

As the economy showed initial weakness and the dollar was weak against the euro and other currencies, speculators flocked to commodities, including oil, Swenson said. As economic sectors such as manufacturing started showing weakness and lessening demand, speculators fled from those oil futures.

“We have been in a decline since July, and a steep decline in the last three weeks,” he said of oil prices. “Now the expectation is that the global market is going to slow down and there will be less requirements for basic commodities, that thinking has changed tremendously.”

Scott Cary of Davenport was filling a gas can for his lawn mower and pickup at Casey’s, 3700 W. Locust St., Davenport.

“I’ve got one more vehicle to fill up,” he said, “but I might hold off a couple of days and see if it gets lower.”

Drivers shouldn’t get too excited, Swenson said. Lower gas prices are a symptom of bigger problems in the economy.

“We have lower gas prices, but we are headed into a recession, we have higher unemployment and stagnating income growth,” he said. “Though we may feel better at the household level, it is an indication of a weak economy.”

Kurt Allemeier can be contacted at (563) 383-2360 or kallemeier@qctimes.com.