Commuters in Merced benefit from falling oil prices

Crude oil prices dropped Wednesday, a bad sign for the economy but a welcome reprieve for drivers.

At the M&A Market in Beachwood, vehicles lined up 18-deep Wednesday to fill up their tanks with gas priced at $1.97 per gallon.

“It’s been like that since 5 a.m.,” station owner Ahmed Mohamed said.

Mohamed, 28, said he was running a special one-day price but said he always tries to stay competitive with stations in the area.

Oil and gas companies led the way down Wednesday as sliding oil prices threatened even more damage to the battered energy sector. Chevron fell 7 percent, the most in the Dow Jones industrial average.

The price of U.S. crude oil sank 7 percent and was trading at its lowest level since May 2003.

But the stock market was not on the mind of Michael Thomas of Merced. The 19-year-old said the cheap gas price was a sight for sore eyes, because his full-size truck “eats” fuel.

Even the long wait – nearly half an hour – was worth his time, he said.

“You won’t get it cheaper,” he said.

The gas station staff directed traffic, making sure drivers queued up along Santa Fe Road and away from busier Beachwood Road.

Tumbling crude oil prices around the world have helped send the national retail average price for gasoline to its lowest mark since February 2009, according to AAA.

Angie Garnica, 43, of Merced had a good excuse for waiting in line.

“I’m cheap,” she said with a smile. “If it’s under $2, I’m here.”

It’s nice to save a little, she said, because the car is moving all day while she drives to work in Livingston or takes her daughter to school at Fresno State.

Falling prices for crude oil around the world have helped send the national retail average price for gasoline to its lowest mark since February 2009, according to a survey by AAA.

Retail averages nationally have fallen for 63 of the past 74 days, for a total savings of 34 cents per gallon, reaching Wednesday’s price of $1.88 per gallon. Gas prices are down 7 cents per gallon for the week, which is the fastest pace gas prices have dropped since the middle of November, according to AAA. Motorists typically enjoy falling gasoline prices in early winter due to decreased demand for gasoline, and that also is helping to push prices downward.

California’s average price of $2.75 per gallon is still the highest in the country, followed by Hawaii ($2.63), Alaska ($2.48), Nevada ($2.41) and Washington state ($2.32), according to AAA’s Daily Fuel Gauge Report.

California’s gas prices tend to be higher than elsewhere for a combination of reasons, said Jeffrey Spring, spokesman for the Auto Club of Southern California. Among them: the state’s clean-air laws require a special formulation that is more expensive to produce; the state has more taxes on gas than elsewhere; “and we’re kind of like an island” when it comes to producing the sort of gas California needs, he said.

So when there is a problem with a refinery – such as an explosion last year that affected an Exxon-Mobile refinery in Southern California – he said, “it takes time and money to get it from other parts of the world, and that makes it more expensive, as well.”

Average prices in the San Joaquin Valley, Spring said, are lower than in Southern California. Merced’s average Wednesday was $2.54; Fresno’s was $2.53; and Modesto’s was $2.43. In Orange County the average was $2.88, and in Los Angeles it was $2.91.

“The Central Valley is one of the least-expensive areas in the state,” Spring said.

The falling crude prices came during a volatile day for the stock market. The Dow dropped 520 points, or 3.2 percent, to 15,549 Wednesday morning before seeing a partial recovery.

The Standard & Poor’s 500 index and Nasdaq both closed lower.

U.S. indexes were down 10 percent or more since the beginning of the year.

Bond prices rose as investors shifted money out of stocks.

This story was originally published January 20, 2016 at 6:12 PM with the headline "Commuters in Merced benefit from falling oil prices."