Gas falls below $2 a gallon at some Milwaukee stations

The price of regular gasoline fell below $2 per gallon on Tuesday at several stations in the Milwaukee area, according to a website that monitors pump prices in the region.

Stations on Milwaukee's northwest side as well as Menomonee Falls and Pewaukee, both in Waukesha County, were selling regular gasoline for $1.99 per gallon, according to milwaukeegasprices.com.

The highest metro area price on Tuesday was $2.38 at a station in Milwaukee just west of downtown, according to milwaukeegasprices.com.

The overall average price in Milwaukee was $2.10 a gallon for regular on Tuesday, 26 cents lower than the average a year ago, according to the website.

The national average price on Tuesday was $2.23.

Market analysts say they expect Milwaukee pump prices to remain stable for the rest of the fall and into winter.

"You get beyond 4th of July next year, you should see some upward price pressure at that time," said Jim Ritterbusch, president of Ritterbusch and Associates, an oil trading and advisory firm in northern Illinois. "But I have a lot of difficulty constructing a scenario that would give us $3 (a gallon) gasoline until (at least) 2018.

"It leaves consumers in a nice spot well into next year," Ritterbusch said.

Whether that translates into higher consumer spending, which drives more than two-thirds of U.S. economic activity, remains to be seen.

"People are saving more," Ritterbusch said. "In some stages of the business cycle, that’s a good thing but in other stages, not so much. Right now we need the consumer to drive stronger GDP (gross domestic product) growth than we’re getting."

Whether fuel prices translate, at least in part, to higher spending in the all-important holiday shopping season also remains an unknown.

It can't hurt.

The National Retail Federation said this month that it expects sales in November and December, excluding autos, gas and restaurant sales, to increase 3.6% to $655.8 billion — significantly higher than the 10-year average of 2.5%.

Target Corp. CEO Brian Cornell said Tuesday he is hopeful lower gas prices will put more money in consumers' pockets for holiday spending.

Beyond consumer spending, the lower fuel prices are allowing businesses that rely on significant amounts of fuel to operate with more of a sense of certainty in terms of budgeting.

Bell Ambulance in Milwaukee operates more than 50 vehicles in its fleet, including advanced life support paramedic ambulances. While on a call, the crews have to leave the rigs running to operate everything from medical equipment to climate controls to flashing emergency lights. The company spends $1,200 to $2,000 a day on fuel.

"If you know there is going to be some stability (with gas prices), it gives you a little more leeway," in making budgeting and spending decisions, said Jason Flegner, deputy operations director for Bell Ambulance.

"When the gas price goes up, you don't know when it's going to go down again," Flegner said. "You have to keep budgeting for a worst case scenario, that gas prices are going to stay there for a while."

When someone is spending more than $1,000 a day on fuel, "The difference between $2 a gallon and $4 a gallon is pretty substantial," he added.

It remains to be seen whether members of the Organization of the Petroleum Exporting Countries cartel, OPEC, will agree to curtail production at a meeting in November.

That's not likely, Ritterbusch said. "There are simply too many members who are unwilling to go along with a deal to cut production," he said. "I don’t have a lot of confidence that they will be able to do a deal."

That doesn't mean they won't come to some kind of agreement.

"They have signaled that they are going to cut production," said Patrick DeHaan, senior petroleum analyst at GasBuddy.com.

"Stay tuned to that OPEC meeting," DeHaan said. "It’s a big one."

But an OPEC production cut would serve to bring additional U.S. shale producers back into the marketplace, a trend that has begun to take hold of late anyway, Ritterbusch said. That would also serve to keep a lid on crude oil prices and fuel prices.

"We’ve already seen drilling rig counts in the U.S. rising for four months," Ritterbusch said.

In the meantime, look for prices to remain stable.

"You’re going to see prices in your area generally gravitating around $2 to $2.25 a gallon," Ritterbusch said. "We could briefly see maybe $1.80 again, but it wouldn’t stay there very long." He said the top price on the high end would be about $2.50 a gallon but, too, "it wouldn’t stay there very long.”