Gas fell below $2 a gallon in Central Illinois for the first time in months, and drivers should enjoy it while it lasts.
"For the moment, it's good news. (Oil refinery) recovery from hurricanes, drops in crude oil prices and seasonal demand decreases all came together at the same time to drive down gasoline prices," said Joanne Shore, a senior analyst with the Energy Information Administration in Washington, D.C.
But with colder winter months approaching, crude oil demand will rise as people burn heating oil. As crude oil prices increase, so will gasoline prices, Shore said.
Unleaded gasoline dropped more than a quarter this month alone in the Twin Cities to below $2 a gallon. It fell more than $1.20 since September, when gas hit a $3.20 high in the days following Hurricane Katrina's destruction to the Gulf Coast and its oil-refining businesses.
Gas sold below cost
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But at $1.99 a gallon in the Twin Cities on Tuesday, gas station owners sold gas below cost and can't sustain that for long, said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association in Springfield.
"I think that's significantly below cost (to gas stations), and I think it's aggressive marketing," he said. "No business can withstand that pressure on cash and expect to stay in business long."
Gas stations are using low prices to attract now-conserving motorists, Fleischli said, but at $1.99 a gallon, they're losing money.
Currently, a gallon of gas from the refiner costs about $1.60. After delivery charges, environmental fees and state, federal and local taxes, that same gallon costs gas station owners more than $2.10, Fleischli said.
Diesel prices, meanwhile, dropped slightly to around $2.79 in Bloomington-Normal, according to AAA. Shore expects diesel prices to rise as well.