Motorists find holiday gift at some area stations: gas under $2 a gallon

Some gasoline stations around Houston have begun selling fuel for $1.99, a neon-lettered reminder that the same collapse in crude prices that has oil interests anxious is allowing motorists to travel farther for less.

According to data compiled by GasBuddy.com, 13 stations in the Houston area listed gasoline prices Thursday under $2 for a gallon of regular - about half of them limiting the bargain to cash purchases.

Steve Fletcher, who was filling up at King Fuels at 3720 Harrisburg Blvd. on the East End, said the lower prices were helping him keep down the costs of regular trips to Louisiana.

"I don't know how much longer it's going to last, so I fill up as much as I can. Money you can save at the pump can be spent somewhere else," he said. "It definitely helps me a lot."

The price of gasoline, which is tied closely to the price of the crude oil from which it's refined, has been in a steady decline since summer. U.S. crude oil prices are about half what they were in June, with U.S. benchmark West Texas Intermediate falling $2.36 on Thursday to $54.11.

On Thursday, the motor club AAA said the average U.S. gasoline price fell to $2.48, below $2.50 per gallon for the first time since 2009 during the economic downturn. That also was the last time gasoline was available in Houston for under $2, according to GasBuddy data.

AAA expects prices to keep falling to an average of $2.25 to $2.40 through the holidays.

Gasoline under $2 is still rare in Houston. The average price in the area Thursday was $2.29, according to GasBuddy figures, down from $2.67 a month ago. One year ago, Houston gasoline cost $3.06 per gallon.

Promotional price

Ali Raza, a supervisor who sets prices at the King Fuels station where Fletcher was filling up, said the $1.99 per gallon price partly reflected lower wholesale gasoline prices, but it also was a promotion to energize sales at the station.

King Fuels has two locations with $1.99 gasoline, he said, one in Houston and one in Galena Park, and both enjoyed double-digit sales increases.

Competitors are likely to follow suit by lowering their prices as well, especially if the price of gasoline keeps falling, Raza said.

"Gas prices will go lower as long as crude prices go lower," said Gregg Laskoski, senior petroleum analyst at Gasbuddy. "Even if crude prices don't go lower, we could still see retail gas prices slip a little bit because the decrease in wholesale gasoline prices has not yet been fully reflected in retail pricing."

Retail gasoline vendors, such as gas stations, buy gasoline in bulk from wholesale sellers.

The falling prices of fuels have helped to dampen inflation and boost the nation's economy.

"One of the old saws in economics is that every penny that gasoline falls is another $1 billion in consumer spending over the year," said Robert Dye, chief economist at Comerica Bank. "We're down quite a few pennies."

But in Houston - where the oil industry is central to the economy - the effects of lower crude prices are more complicated.

Exploration and production companies already are slashing next year's budgets for finding and producing oil, and it's likely those cuts will include layoffs.

Bill Gilmer, director of the institute for regional forecasting at the University of Houston's Bauer College of Business, said job losses could total 25,000 to 30,000 in the oil industry and businesses that support it.

More good than bad

Still, he believes a growing U.S. economy will more than offset the negative effects of falling oil. Low and relatively more stable natural gas prices already have boosted manufacturing and prompted multibillion-dollar investments in refining facilities that are under construction, providing thousands of jobs.

"There's never a good time for oil prices to fall in Houston," Gilmer said, "but if you could pick the right moment, this would be it."

The time felt right for Luis Duran, who paid $1.95 per gallon at the Mario Food Mart at Telephone Road and Almeda Genoa Road near Hobby Airport.

"You can't beat this price," he said. "What a Christmas."

James Nielsen contributed to this report.