January 29, 2023

Edwin Johnson thought he misread Thursday’s question.

It had to be made clear that he was asked about falling and not rising gas prices.

“Oh, I don’t even realize it,” Johnson said.

In fact, the average price for a gallon of regular gasoline in the state of Arkansas is under $3, according to the AAA.

Standing next to his 2004 Mercedes E500, Johnson took a few steps and lowered his sunglasses to look at the digital sign of the Exxon gas station on Cantrell Road.

In bright red he saw a price of $2.89.

“That’s cool, man,” said a bewildered Johnson, who for months had been paying up to $80 to fill up his car once a week. “Certainly surprised. But I’m happy to see it.”

According to the AAA Arkansas Weekend Gas Watch, the statewide average gas price in Arkansas Thursday was $2.98 a gallon for regular unleaded gasoline. That’s 10 cents cheaper than a week ago and 4 cents cheaper than the price on December 1, 2021.

Meanwhile, the national median price for a gallon of lead-free lead is $3.47, down 12 cents from last week and up 9 cents from the price per gallon a year ago.

Johnson could be forgiven for being surprised by prices below $3.

Combined with the Russian invasion of Ukraine in February, OPEC gas production cuts and inflation, gas prices in Arkansas and across the country were well above $3 for most of the year.

As reflected in his reaction, Johnson said it “got to a point” where he stopped paying attention to price.

“Because everything was so high,” Johnson said. “You just adapt and get used to it.”

Rebecca Irons, another customer at Cantrell Road Exxon, said she feels “great” about the reduced prices.

“I’m happy because I travel a lot these days,” she said of moving into assisted living with her mother and selling their home.

Irons said this while filling up her Subaru Crosstrek.

“It’s actually a really cool economy car,” Irons said. “It’s been about three weeks since I had to fill up. I don’t usually drive much. But I had to drive some distances so it’s really nice not having to fill up every week.”

The recent slump in gas prices can be “largely” attributed to the stabilization in crude oil prices, said Nick Chabarria, a spokesman for AAA Arkansas.

Chabarria said the price of crude oil accounts for about 50% to 60% of what customers pay at the pump. In 2021, the rest of the costs were split between refining costs (14.4%), sales and marketing (15.6%), and federal and state taxes (16.4%), according to the US Energy Information Administration.

“We’ve seen crude oil really settle around the $80 market and below for the past few weeks,” Chabarria said.

Arkansas drivers are experiencing the lowest statewide gas price average since January, according to the AAA. At $2.98 per gallon, Arkansas has the third lowest price behind Texas ($2.84 per gallon) and Oklahoma ($2.96).

Chabarria said Arkansas typically ranks in the top 10 lowest averages in the country.

This can be attributed to Arkansas’ low fuel tax rate on gasoline ($0.246 per gallon), but mostly to location, location, location.

“Kind of sorts of a center in the middle of the country, really not far from the Gulf Coast refineries, also close to Cushing, Oklahoma, refinery centers, which is a big center for Midwest refineries, which compared to the Arkansans really relatively lower fuel costs in other states,” Chabarria said.

It’s entirely possible that this respite will be short-lived.

OPEC+ is due to meet this weekend and the group may decide to trim crude oil production on hopes of a supply tightening and rising prices.

Some key US oil refineries, which have been producing gasoline again after months of being shut down for maintenance and repairs, also helped keep prices low for the moment.

But an equally big factor is the current turmoil in China. While its leaders are signaling that new Covid lockdowns are imminent and sparking protests across the country, the expected economic fallout has seen oil traders bearish.

China alone accounted for 16% of global oil demand last year, according to research firm Capital Economics, which forecast its December oil purchases to fall by 1 million barrels a day as Covid infections spread. The impact of such a drop on global oil markets is significant, reducing the price of Brent crude by as much as $10 a barrel, or more than 10%.

The information in this report was provided by Evan Halper of The Washington Post.

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