Janesville36°

Gasoline price decrease offering help to some people

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NEIL W. JOHNSON
October 3, 2011
— After a spike in prices last spring pushed unleaded gasoline higher than $4.10 a gallon in Wisconsin, average prices at the pump have fallen to their lowest levels in six months, petroleum industry analysts say.

The average price for a gallon of unleaded in Wisconsin late last week was $3.45—a 16.5 percent decrease from the statewide peak of $4.13 per gallon in late April, according to data from GasBuddy.com, an online gas price-sharing network


The main reason for the price falloff is a seasonal change in demand, said Patrick DeHaan, a petroleum industry analyst at Brooklyn Park, Minn.-based GasBuddy.com.


DeHaan said demand for gasoline is typically lowest in the fall. He added that national factors such as an anticipated slowdown in economic growth also have led to gas prices tapering off, but he doubts they'll fall much lower this year.


DeHaan predicts the trend will slow before bottoming out in November or December, with prices resting at an average in Wisconsin of about $3.25 a gallon. He said prices could rise again next spring.


However temporary, the decrease is providing relief for people whose work involves a lot of driving.


Heather McLoud, a delivery driver for Jimmy John's sandwich shop in Janesville, said she was thrilled last week when she saw gas prices at one station had dipped to $3.30 a gallon.


"I saw that, and I was getting pretty stoked," she said. "I made a little note on my sheet to share with the other drivers."


Like many delivery drivers in the food service industry, McLoud has to provide her own vehicle and pay for her own gas. With sandwich deliveries, she covers 50 to 80 miles a day in her 2001 Chevrolet Blazer, and business at the shop has been picking up.


With current prices, a fill-up costs McLoud $40 or $50. That's down from $60 or $70 when gas prices spiked last spring.


McLoud said she's had extra money lately thanks to the savings on gas. Still, she spends it on vehicle maintenance first.


"I made enough the other day to get an oil change," said McLoud. "That's key. When you do deliveries, you've got to take care of your vehicle."


Brad Harnisch, who owns Floral Expressions, a flower shop in downtown Janesville, was less enthusiastic about the drop in gas prices.


He called the decrease "a relief," but said even at $3.40 per gallon he's still losing money on floral deliveries.


Floral Expressions delivers locally but also ranges out to communities including Beloit, Milton and Evansville. In order to stay competitive, Harnisch has not increased delivery charges for a few years—even though the shop's costs have gone up.


Because the shop is seeing less business in the down economy, deliveries now go out with fewer orders, and they're spread out all over the place.


With fluctuating fuel prices that often seem to settle at new highs, Harnisch says he's spent the last few years getting used to a new normal: higher costs and less business.


The last time gasoline fell below $2 per gallon, it was in part a response to the spectacular collapse of major Wall Street companies during the recession in 2008 and 2009.


If prices fall that low again, it likely wouldn't be a good economic indicator, DeHaan said.


"If we saw a return to $1 or $2 gasoline, it's likely it would be tied to some economic fallout," he said.


Harnisch is more worried about the opposite happening.


"At $4 a gallon, people's paychecks tend to go to fill gas tanks.


"They aren't going to send flowers," he said.



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