Michigan motorists finding gas for $1.99

Holly Fournier and Tom Greenwood
The Detroit News

Ypsilanti — Gas selling for less than $2 a gallon Thursday morning had some Michigan motorists wondering if they'd stepped into the Wayback Machine.

While prices continue to drop across the state, the city with the lowest of the low prices is Ypsilanti, where motorists saw a price of $1.94 per gallon.

Peter Mahan, manager of the Mobil station in Ypsilanti on Clark at Prospect, said he dropped gas prices to $1.99 a gallon after a 5:30 a.m. fuel survey showed his competition below $2 a gallon.

"We base our price on our competition," he said. "They were all at $1.99 and were at $2.09."

Mahan followed the early-morning discount with another discount at 10 a.m., bringing the price down to $1.94 a gallon. He said low prices help to bring in new customers who happen to drive by and see the bargain.

"Our business is a lot of repeat customers, so really regardless of what our price is, they're going to come," he said. "But what will happen is we're going to get new customers with our low prices."

Plymouth resident Dean Klump, 68, stopped on his way to see his doctor in Ypsilanti, expecting prices just over $2. "It's been a long time (since prices were this low)," he said. "But I'm happy to see the prices have come down, that's for sure."

Chris McGill of Ypsilanti said he heard about the prices when his wife stopped at the station earlier Thursday morning. "This is the first time I've seen it this low in a long time, so I'm pretty excited about it," said McGill, 25.

Money saved at the pump will go toward last-minute Christmas gifts for his 6-year-old son, McGill said. "My son is going to have a great Christmas," he said.

Prices were rapidly dropping in the area Thursday. Gas was $1.98 at a Boggs station located at Holmes and Ford, while at the lonely Citgo station next door the price was $2.26 per gallon.

The Speedway on Michigan near Ford started advertising regular gasoline at $1.98 a gallon as early as Wednesday evening, when Ypsilanti resident Nick Woodall drove by on his way to his night shift at a local distribution company.

"I saw it last night," said Woodall, 28. "I was hoping it wouldn't go up before I got off work."

Woodall's shift ended just after 8 a.m. Thursday and he joined more than a dozen commuters at the station, some of them waiting their turn at the crowded pumps.

News of low prices in the area is spreading "by word of mouth," Woodall said. "I called my wife and told her she better get up here during her lunch break."

Canton Township resident Marlon Murray, 32, said he wasn't aware of how low the prices had dropped until he was on the road Thursday morning to Ann Arbor, where his daughter attends a charter school.

"I just know the prices are usually lower at this Speedway, so I was kind of scouting a little," he said. "I actually saw $2.19 up the street and I was getting ready to settle."

Mary Heater of Ypsilanti said she found out about the Speedway's low prices while watching the news Wednesday evening. "I left early this morning for this," said Heater, 62, who was taking her grandchildren to school.

Woodhall said lower gas prices will keep money in his pocket for more weekend family activities. But the discount "would have been nice a couple weeks ago," he said. "So we had more money for Christmas."

According to the AAA of Michigan's Thursday fuel-gauge report, the statewide average cost of a gallon of regular is $2.34 compared to the national average of $2.44 per gallon.

The current average cost per gallon in Detroit is $2.36 for regular compared to $2.95 a month ago and $3.13 for the same time in 2013.

It's much the same in Grand Rapids where the average cost on Thursday was $2.22 per gallon versus $3.03 a month ago and $3.04 a year ago. In Saginaw/Bay City, the prices are $2.32, $2.97 and $3.06 respectively.

Lower costs should have a positive impact on holiday sales and travel, according to AAA of Michigan spokeswoman Susan Hiltz, who pointed out that gas prices are about 71 cents per gallon lower than this time in 2013.

"This year more Michiganders will be traveling than ever before to celebrate the holidays and ring in the New Year with family and friends," Hiltz said. "Continued growth in consumer confidence and disposable income, an extended holiday period and low gas prices should drive expected travel volumes to the highest level we have ever seen during the year-end holidays."

There are a number of reasons behind the drop in prices, according to oilprice.com, which is predicting lower gas prices for 2015.

"The demand for oil in 2015 will drop to its lowest level since 2002 because of an oversupply of crude and stagnant economies in China and Europe, according to OPEC's latest forecast," oilprices.com said on its website. "OPEC's monthly report said demand for the cartel's oil will fall to 28.9 million barrels per day next year, 280,000 barrels lower than its previous forecast and the lowest in 12 years."

Additionally, the U.S. Energy Information Administration has cut its 2015 forecast for growth in global oil demand by 240,000 barrels per day, down to 880,000 per day.

On top of that, in November OPEC decided not to lower its production level, adding to the oil glut that started with the U.S. boom in high-quality shale oil.