Gas prices in La Plata and Montezuma counties are dropping again after months of hovering close to $4 per gallon.
In Durango, prices have dropped more than 50 cents since July. As of Friday, the average price in La Plata County was $3.56 per gallon, according to AAA data. Meanwhile, while prices in Montezuma County also dropped, they remain roughly 30 cents higher on average at $3.80. Both are still higher than the average across Colorado, which is $3.21 per gallon, and the national average of $3.33 per gallon, according to AAA .
A decrease in the price of oil per barrel, along with a stagnant demand for gasoline, contributed to the nearly 10% drop in prices across the country. Additionally, non-OPEC oil producers have started creating greater supply, Fort Lewis College economics professor Nate Peach said.
Oil is used as a raw ingredient to make gasoline for automobiles and is mostly what determines gas prices.
Peach said China’s economy plays a large role in the decreased gas prices.
“You have China that just really hasn’t pulled itself completely out of the pandemic,” he said. “There’s trouble in its real estate market. Its economic growth hasn’t been quite what it was before the pandemic. And so that is kind of putting downward pressure on demand.”
According to the U.S. Energy Information Administration, China imported about 13 million barrels of oil per day during the height of the COVID-19 pandemic in 2020.
At the start of 2023, China was only importing around 8 million barrels of oil per day and steadily rose to about 11 million as of September.
“We’ve had these pretty high gas prices for the last two and a half years. And as a result, we’ve seen suppliers respond,” Peach said. “U.S. production is up – it’s at an all-time high. Some non-OPEC countries like Brazil and Ghana have been producing more oil. So, there’s these non-OPEC players that are putting more oil out there as they responded from the price increases.”
Production for Brazilian oil company Petrobas was up almost 10% during its third fiscal quarter, according to reporting by Reuters.
The decrease took Peach a bit by surprise, considering the conflict between Israel and Palestine.
Given the characteristics of the market, some news outlets have speculated that gas could below $3 per gallon in many states.
While it is wishful thinking, Peach said it would be highly unlikely that would happen in Durango.
“We have this war in the Middle East, which could very easily spill over and affect oil in a very real way very quickly,” he said.
The concern is any sort of intervention sanction, much like the U.S. imposed on Russia.
“That would limit supply explicitly,” Peach said. “I could also imagine more of like a political intervention whereas an exercise of soft power, certain OPEC players start to limit supply even more as a way to kind of leverage an economic stick against Israel.”
The drop in price comes just before the holiday season, where families are likely to be out and about, or traveling.
According to data from JPMorgan Chase, for every dollar less spent at the gas pump, individuals spent about 80 cents on other things. Almost 20% of the gas savings were spent at restaurants, but department stores, entertainment, and electronics and appliances also saw significant gains.
Nobody understand this better than the executive director of the Durango Business Improvment District, Tim Walsworth.
Walsworth said anecdotally, there are a lot of shoppers to come from around the Four Corners to shop at downtown Durango stores.
“Durango is very lucky to have all of the unique shops and restaurants. It is a draw for people who might live a little farther away,” he said. “So any time gas prices are a little less, that’s a good thing.”
Peach indicated that lower gas prices were a positive for the area, but he didn’t think it would impact travel to Durango as much. Because Durango’s main winter attraction is skiing, he said it will likely depend more on how much snow the area receives.