Colorado motorists are enjoying an early holiday gift at the fuel pumps with gasoline priced below $3 a gallon at dozens of stations.
Analysts say weak consumer demand and ample stockpiles are pushing prices to their lowest level in 10 months.
A handful of metro Denver stations were selling regular unleaded gas at $2.89 a gallon Friday, according to price-reporting site . More than 50 metro- area stations posted prices of $2.99 or less.
Not everyone is at the sub-$3 level. Metro Denver’s average price Friday was $3.12, down 25 cents from last month’s $3.37, according to AAA.
Gasoline refiners are in a disadvantageous position because they’re trying to sell bulging inventories of fuel into a soft market, said Patrick DeHaan, a Chicago-based senior petroleum analyst for
“Instead of being a seller’s market, it’s a buyer’s market,” he said. “It’s hard for refineries to find buyers at the prices they’d like to get, so they’ve had to bring prices down.”
DeHaan said metro Denver has some of the lowest gas prices in the nation because much of its petroleum supply originates from Canadian oil sands, which sells at a discount to common benchmarks such as West Texas Intermediate crude.
Motorists gassing up Friday for $3.11 a gallon at a Diamond Shamrock near downtown Denver ranged from pleased to blase at the lower prices.
“It doesn’t seem all that cheap to me,” said Sean Jensen, filling a Ford pickup. “I’m old enough to remember when gas was less than a dollar. But if it goes below $3 and stays there, I guess we’re better off.”
Colorado gas prices hit a record high average of $4.03 in July 2008. The lowest price during the past decade was $1.04 in December 2001, unadjusted for inflation, according to the U.S. Energy Information Administration.
DeHaan said prices are likely to stay near current levels until spring, when refiners switch over to warm-weather formulations that are more expensive to produce.
“I think motorists can look forward to stable or lower prices as they hit the road for holiday travel,” he said. “But when we approach the summer driving season, there will be upward movement.”
Lower fuel prices have been driven by a combination of relatively large supplies, slack demand and falling commodity prices brought on by the European credit crisis, said Bill Gallagher of Offen Petroleum, a Denver-based gasoline wholesaler and retailer.
Refiners are seeking to reduce their supplies.
“They’re pushing inventory out the door,” he said, “and they’re using price to do it.”
Steve Raabe: 303-954-1948 or sraabe@denverpost.com
Average metro Denver price of regular unleaded
Friday: $3.12
Week ago: $3.20
Month ago: $3.37
Year ago: $2.69
Source: AAA Daily Fuel Gauge Report
