by Mary King, staff writer
From the January 17, 1985 edition of The Salem Times-Register
Local residents are getting more for their money at many area gasoline stations this month, and if industry analysts are correct, gasoline prices should continue to decline over the next few months.
Regular self-serve gas has dropped below a dollar at many area pumps, and most stations are advertising rates at 99.9 cents. Nationally, industry analysts are calling this the lowest drop in gasoline prices in five years, and are predicting prices could drop as low as 94 cents a gallon before they level off.
According to Ron Lundy, vice president of Fuel Oil & Equipment Co. Inc., a local distributor, local gasoline prices at the pump are averaging 99.9 cents for regular and $106.9 for unleaded.
“In the past six to nine months, gasoline prices have been going down with little relief,” Lundy said. “It is just a result of the old law of supply and demand. There is just more gasoline on the market than the demand can take care of.”
“Retail prices at the pump are the lowest they have been in several years,” said Tony Worrell, manager of T& R Garage on 4th and Union streets in Salem. “We broke 99 cents about 10 days ago.” Worrell added that prices have been dropping over the past four months and that he expects prices to drop as low as 95 cents in the next 30 days.
“We’ve had two deductions in the past two days,” Joe Owens, owner of Owen’s Gulf Service Station on 1003 Electric Road. In Salem said last Friday. “Prices dropped two cents on Wednesday and two cents today. Overall, our prices are down about 10 cents from last year.”
“In October our pump prices started decreasing and they have been decreasing each,” said George Pillis, owner of Pillis Brothers Union 76 Service Center in Salem. “I look for prices to keep going down if the market stays the way it is.”
Henry Brabham, owner of Brabham Petroleum, a $20 million business based in Vinton has seen pump prices dip as low as 98.9 cents at the company’s Lancer Service Stations. The Vinton business man attributes gasoline prices in part to gas wars.
“Gas is a crazy business,” he said. “In a given day, a marketer will cut his price and sell at cost. I’ve done it,” he said. “It’s called the gas war.”
Although station owners are quick to cut prices, Brabham added they do so with out benefit to themselves. “When you cut prices that low, you lose your margin of profit,” he said. “But gas men are stubborn business men. They are just a different kind of businessman.”
According to Jim Heizer, executive director of Virginia Gas Retailers Association, gas prices will possibly drop by another four to five cents before leveling off. “Indications show that the oversupply just may continue throughout the year,” he said.
Industry analysts have contributed the five year low to an oversupply of crude oil on the market created by a conglomeration of factors.
“Some have even gone as far as to call it a glut on the world market,” said Heier.
“Last June OPEC placed quotas on oil countries in an effort to keep gasoline prices up in a market where demand was low and supply high. But some countries have been cheating on these quotas, and they are still overproducing,” Heizer said. They are selling crude oil on the spot market at reduced prices and this is causing gasoline prices to fall.”
Another factor contributing to the decrease in gasoline prices is the current pressure for more efficient cars, according to industry officials.
“If you just look around, you’ll notice there are a lot more small cars today than there were five or 10 years ago,” Lundy, said. “Small cars today get 25 to 30 miles per gallon. Cars today are requiring a lot less product.”
Gasoline prices should continue to dip for the next few months and are expected to level off around 95 to 99 cents a gallon in early spring. Industry analysts are predicting the prices to rise as usual in the summer when the vacation season picks up.
-Prepared by Shelly Koon
