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Cheap gasoline may carry a high price tag in SE Texas

December 5, 2018

Texas drivers may enjoy gasoline’s recent price drop — especially with holiday shopping, traffic and travel on the horizon — but they may not want it to last.

AAA announced this week that fuel prices nationally had fallen below the previous year’s daily average for the first time in 18 months. This comes after a continuous price decline since early October. As of Tuesday in Jefferson County, a gallon of gasoline was selling for $2.15 on average.

Prices at some local service stations have already dipped below $2.

Tempering local enthusiasm for the cheaper fuel is that the price slide corresponds with falling crude oil prices. West Texas Intermediate was selling for just $52.78 on Tuesday, down 31 percent from its yearly high reached just two months ago.

That is still above the sub-$40 per-barrel costs seen in early 2016 during the last major price collapse, but it’s hardly ideal for a local economy based largely on energy production and refining. When oil prices get too low, it is no longer profitable for refineries to process it.

Bill Allen, president and CEO of the Greater Beaumont City of Commerce, said he does not foresee a long-term problem for the area.

“While there will always be short-term changes that take place, energy companies are choosing to invest in Southeast Texas based on long-term trends,” he said in an email.

Besides, when consumers save money at the pump they often go out and shop more, supporting local businesses and putting money into the local economy.

The car business is among those to see the impact. There is a direct correlation between gasoline prices and the types of vehicles sold, said Larry Quebodeaux, a sales consultant at Mike Smith Crystler Jeep Dodge Ram in Beaumont.

“When fuel prices go down, we get people in here buying big trucks and then when they go back up people want the smaller cars, like clockwork,” Quebodeaux said. “You could plot it on a graph. When gas is down, people buy trucks and SUVs, and when it goes up, they buy the smaller cars. It’s always been like that. It’s a cycle, year after year. It’s like the stock market.”

Drivers might find it worth noting that the Dow Jones Industrial Average — the stock market — on Tuesday plummeted nearly 800 points.

haley.bruyn@beaumontenterprise.com

twitter.com/HaleyWrites_BE

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