Falling of gas prices expected to continue

Gas prices in the Wichita area continued to plunge Monday – down 17 cents in the last week – with many stations falling below $2 per gallon.

The average price in the area Monday afternoon was $2.03 for regular, with a low of $1.93 in some locations, according to GasBuddy.com. The price is down 53 cents from a month ago and $1.16 per gallon from a year ago.

And prices will likely to continue to fall, said GasBuddy senior analyst Will Speer. The company is projecting that Kansas will see prices fall to $1.70 to $1.80 per gallon by the end of the year.

There are several reasons for the tumble, he said.

Oil prices have fallen steeply in the last year and, in particular, since late August. The benchmark price for oil, West Texas Intermediate, was just above $44 per barrel on Monday – less than half what it was a year ago.

Also weighing down prices is the coming switch over from summer-formulated gasoline, which is more expensive to produce, to less-expensive winter-formulated gasoline. The change for refineries happens this week.

Prices could rise if one of the region’s refineries shuts down unexpectedly, he said, as it did a few weeks ago when the BP refinery near Chicago closed one of its units. But planned maintenance shutdowns are typically worked around and affect prices less, he said.

He expects prices in the state to fall another 20 to 30 cents per gallon through Christmas, but these conditions won’t last forever.

“For 2016, there will be more refinery turnarounds than this fall and that will bring some upward pressure,” he said. “And then they’ll start prepping tanks for the summer gasoline production.”

People may be spending less on gasoline, but they don’t seem to be spending that savings on other things, said Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University.

Hill – and many economists across the nation – predicted that lower gas prices would be a boon to retailers.

“I was wrong,” he said. “That is typically what you have from consumers, but I think nationally there’s been only some spending, and even less here.”

Local consumers are anxious about the future and are saving the money, he said.

“I think they’re uncertain about the marketplace in Kansas, so they’re holding onto every nickel they can,” he said.

This story was originally published September 14, 2015 at 10:26 AM with the headline "Falling of gas prices expected to continue."