As Crude Oil Prices Sink, Consumers Save at the Pump

Crude oil prices have continued to decline in the first six weeks of 2016 after plummeting in the final months of 2015, shaking stock markets and worrying investors. As countries amass oil stockpiles, fanning oversupply concerns, consumers may be enjoying the short-term benefits of the glut in the form of lower gas prices.

The average price of regular gasoline in New York City has sunk to $2.10 per gallon, according to the AAA’s Daily Fuel Gauge Report. One month ago, that same gallon would have cost $2.28; a year ago, close to $2.50. Nationwide, the average price for a gallon of regular gas is just $1.71. This decline in gas prices parallels oil’s drop. According to the U.S. Energy Administration, a barrel of Brent Crude, the global benchmark, cost $31.64 on Monday, compared to over $60 for the same week last year.

The drop in crude prices has made it cheaper for gas stations to buy the refined gasoline product that consumers pump into their cars. However, despite paying less for their gas, station owners have not seen their profits grow. Instead, stations are lowering their prices to stay competitive.

“When the price goes up, we raise your price, when the price goes down, we lower your price,” said the owner of a Mobil station at 303 West 96th Street, situated before an entrance to the Henry Hudson Parkway. “My gas prices have absolutely gone down, but it’s reflected by everybody charging less.”

Average price of regular gas nationwide. Data from the U.S. Energy Administration.

While gas stations watch their profits shrink, drivers are delighting — particularly professional drivers. NYC taxi drivers must purchase their own gas, and there are strict rules about refueling — for example, the gas tank must be full when your shift is over.

“Any time you finish working, you have to fill up the gas for the next guy,” says Ibrahim Aboudou, a taxi driver. “Don’t have a choice.”

In addition to this cost, taxis are not allowed to pick up customers if the vehicle has less than half a tank of gas. The reasoning behind this is simple, Aboudou says — what if you had to refuel with a passenger in the car? Unacceptable.

Drivers for Uber, a ridesharing service, are enjoying similar benefits. Jose Ferraras, an Uber driver, says that lower gas prices mean more money in his pocket.

“All Uber does is provide the passengers,” said Ferraras, in addition to taking 30% of every ride. Uber drivers operate their own cars and bur their own gas, so with less overhead to pay, Ferraras makes more money.

Ferraras works five to six days a week, usually for eight hours at a time. He refills his tank every 200 miles or so, which typically means once a day. His Toyota Camry tank capacity is 17 gallons, so today, it would cost him $35.70 to completely fill his tank. A year ago, it would have cost $42.50. Assuming Ferraras fills his tank once a day, Ferraras is spending $40.08 less per week on gas than in 2015 — over a full tank.

Luckily for Ferraras and Aboudou, crude oil may continue to drag down gas prices for the near future. Brent Crude rose to just over $35 a barrel on February 3, but that small spike was short-lived — it dropped to its current level between $31 and $32 less than a week later.