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Falling Gas Prices Benefit Drivers, Businesses

Kent Kanouse, flickr
 

Kent Kanouse, flickr

California gas prices are down about 75 cents a gallon compared to this time last year. Allison Mac is an analyst with GasBuddy.com. She says lower worldwide demand and higher supplies have resulted in lower prices across the board. Mac expects California to see an average price around $2.80 a gallon next year. She says lower prices are translating into profits for gas stations.

"A lot of consumers are making more stops at the gas station now, filling up whenever they see the prices," she says. "So these gas station owners are making a lot of profits from us going into the convenience stores, purchasing coffee, purchasing a bagel."

Sanjiv Patel owns about ten stations throughout the Bay Area and Central Valley. He says when prices go down, his costs decrease as well. But his profits are tied to the number of gallons he sells. And he says quickly falling wholesale prices benefit him as well.

"Say for example, one day my whole purchase price might go down by ten cents and I’ll reduce my retail price by four cents," he says. "So, I’m actually, on that day’s purchase, making six cents extra."

Analyst Mac says she expects California prices to increase by 10 to 12 cents next year when a new provision of California’s program to reduce greenhouse gas emissions goes into effect. But she says the lower prices will cushion the impact to consumers.

"Instead of $2.80 cents, we might see $2.90," she says, "which is a lot better than how it was last year when we would be seeing $3.90 hiked up to the $4.00 range."

Mac says California will always have more expensive gas because of strict environmental requirements and taxes.