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Alabama Drivers Are Filling Up On Cheap Gas

AUDIE CORNISH, HOST:

If you bought gasoline over the weekend, you probably noticed prices are dropping again. AAA says that the national average is down to $2.65 a gallon and some experts expect gas prices to keep falling, down to maybe $2 a gallon by winter. In Alabama, gas prices are nearly already there. Kyle Gassiott of Troy Public Radio sent this report.

MARY JENKINS: Fill it up.

KYLE GASSIOTT, BYLINE: At a gas station on the east side of Montgomery, Mary Jenkins is making sure that when she fills up her tank, her cost is the best she can get.

JENKINS: Forty-one fifty-three. Try to make it 42.

GASSIOTT: It was the sign advertising $2.17 that beckoned Jenkins. She's more than happy to pay that when she drives the 15 miles north from her hometown to shop in Montgomery because the savings are substantial.

JENKINS: Compared to Union Springs, quite a bit - because gas is like, $2.50-something, as compared to this $2.17.

GASSIOTT: What Jenkins and other motorists have found is that it's a good time to be gassing-up in Alabama because with prices below the $2.50 mark in most places, the savings could add up to almost $700 by the end of the year.

GREGG LASKOSKI: The good news for folks in Alabama is that they're looking at some of the lowest combined gasoline taxes in the country.

GASSIOTT: Gregg Laskoski, a senior petroleum analyst with gasbuddy.com, says that with the national average of $2.65, Alabama is the envy of the nation.

LASKOSKI: Just to put these numbers in perspective, in Alabama you're paying $0.39 a gallon in combined federal and state gasoline tax, but here in Florida where I am, we're paying $0.54 a gallon.

GASSIOTT: But it's not just a lower tax rate that's cutting the price of gas in Alabama. Prices are dropping across the country because of lower oil prices. Chris Christopher, an economist with IHS forecasting firm, says there are global issues at play.

CHRIS CHRISTOPHER: Basically, oil prices took a pretty strong hit in the month of July. Some of it has to do with fears that there's going to be a Chinese growth slowdown.

GASSIOTT: And Christopher says there's another factor. The potential nuclear deal with Iran could open up new supplies. If this Congress signs off on the deal this fall then those new oil supplies could push gas down. And while the lower gas prices are great for places like Alabama, it's not so good for places like West Texas, where crude oil was selling for $53 a barrel in mid-July and is currently about $46, according to Christopher.

CHRISTOPHER: Places like West Texas and North Dakota, where people depend on the energy markets for their livelihood, these places have suffered significantly.

GASSIOTT: All of this spells great savings for the customer, but what about gas station owners? With lower gas sales, they must be losing out in this scenario, right? Not so, says Deepak Ahuja. He runs a convenience store north of Montgomery, selling gas for $2.15 a gallon, and he likes the low prices.

DEEPAK AHUJA: Now it's even better for us because they have more money to spend inside the store. And it helps because we don't make much money on the gas side, but we make money selling sodas and snacks inside the store.

GASSIOTT: So with the low prices, his pumps stay busy and so does his convenience store. For NPR News, I'm Kyle Gassiott in Montgomery, Ala. Transcript provided by NPR, Copyright NPR.