A price war sent the cost of a gallon of regular unleaded gasoline down to $1.77 over the weekend in Jefferson County.
Although the prices were too low to last, drivers who missed out don’t need to despair. There is likely to be more cutthroat competition in the weeks ahead as the supply of gasoline outstrips demand.
A growing number of stations in the metro area are offering regular unleaded gasoline below $2 a gallon, and the experts don’t expect that trend to reverse until February.
The weekend battle among stations at West 20th Avenue and Youngfield Street ended Monday afternoon after one of the competitors, a Conoco, cried uncle and set its price at $1.99 a gallon.
Rival Applewood Gas Express, an independent, lifted its price per gallon to $1.97, and the truce appeared to hold.
“He gave me two pennies. I won’t fight him,” said Jay Tahmourasi, owner of Applewood Gas Express.
His store, which averages sales of 8,000 gallons a day in normal times, had sold about 20,000 gallons a day since Thursday, when the price war started.
The Conoco had no comment.
Gasoline prices in the Denver area averaged $2.06 a gallon Monday, according to , which is published by . That compares with $2.31 a gallon a week ago and $3.28 a month ago.
AAA has an average Denver price of $2.11 a gallon, an average Colorado price of $2.21 and an average U.S. price of $2.25. It is also showing big price drops over past weeks.
A gallon of regular unleaded gasoline last dipped under $2 in late January 2007.
Denver has enjoyed prices below the national average because refiners serving the area weren’t as vulnerable to disruptions seen in the Gulf Coast.
“Colorado has been insulated from some of the storm-related problems from hurricanes Ike and Gustav,” said Wave Dreher, a spokeswoman for AAA Colorado.
The sharp decline in oil prices, from $144 a barrel in July to $62.41 a barrel Monday, is the biggest reason for the declines in gasoline prices.
Scanning prices online
With a job for a fire-alarm company that takes her all across the metro area, Wheat Ridge resident Jennifer Jacobson said she constantly scans gasoline prices online to find the best deals.
Filling the 19-gallon tank on her crossover SUV used to cost $70. Her last fill-up went for $40, she said.
“That $30 a week is significant,” Jacobson said. “It makes a difference between whether I can afford daycare so I can keep working.”
The lower gasoline prices are also starting to renew interest in trucks and sport utility vehicles, which fell out of favor when gasoline spiked to $4 a gallon.
The AAA’s car buying service, AutoSource, is reporting that the trade-in values of less fuel-efficient vehicles are increasing again. “People have short memories,” Dreher said.
Although some auto dealers in the northeast part of the state reported running out of trucks in August, overall demand is still muted, said Tim Jackson, president of the Colorado Automobile Dealers Association.
“The market has chilled on this whole economic slowdown, and not much of anything is selling right now,” he said. But Jackson expects that the combination of large dealer incentives and low gasoline prices will thaw out the market for big vehicles.
Although consumers complain they are being gouged when prices rise, the reality is that retailers operate with fatter margins when gasoline prices are falling, said said Jason Toews, co- founder of .
“There is not much of an incentive for stations to lower their prices other than what their competitors are charging,” Toews said.
Fatter profit margins are what allow price wars to break out and why they will become more common, he says.
Tahmourasi said he was changing prices as often as 10 times a day and the nearby Conoco was matching.
He reached his break-even point at $1.77, but the blow was cushioned by higher food and diesel sales.
“It has been crazy,” he said.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
