Gasoline at $3 Even Has Store Managers Filling Up.

http://www.bloomberg.com/news/2014-10-31/average-u-s-gasoline-drops-below-3-for-first-time-since-2010.html

The first thing Kathy Parker did when she showed up for work at a Michigan gas station two days ago was change the price of gasoline displayed outside the shop to $2.99 a gallon from $3.04.

The second thing she did was fill up.

“I pulled my car around to the pump and topped off,” said Parker, a store manager at the station in the town of Grass Lake. “And then it got real busy. I didn’t ever think it’d get below $3 again.”

For the first time in almost four years, U.S. drivers are paying an average of less than $3 for a gallon of gasoline, according to the Heathrow, Florida-based motoring club AAA. That’s down from this year’s peak of $3.696 in April.

Sliding prices are seen saving the typical consumer $500 a year and are coming just in time to boost spending during the holiday shopping season, according to analysts including IHS Inc. (IHS) The bonus at the pumps represents the biggest benefit to consumers to date from a record boom in domestic oil production that has contributed to a global crude glut and helped bring down international prices.

“We’re in a new era of lower gasoline prices,” Phil Flynn, senior market analyst at Price Futures Group, said by telephone from Chicago. “I just worry about American drivers. When they pull up to the gas pumps and see $2.99 gasoline, they might have a heart attack. They’re going to think they’re in a time warp.”

Oil Prices

U.S. benchmark West Texas Intermediate oil tumbled $14.21 a barrel in the three months ended Sept. 30, the biggest quarterly decline since 2012, and on Oct. 27 slipped below $80 to the lowest level in 28 months. North Sea Brent crude, the global benchmark, slid $17.69 a barrel in the same quarter and settled at $85.86 yesterday.

Prices have fallen with U.S. oil output at the highest level since at least 1983 and the Organization of Petroleum Exporting Countries producing the most in more than a year. At the same time, the Paris-based International Energy Agency lowered its estimate for global demand growth for this year and next in an Oct. 14 report.

“For every penny that the national average falls, more than one billion dollars per year in additional consumer spending is estimated to be freed up,” Michael Green, an AAA spokesman in Washington, said on the group’s website.