Tucson-area service station started charging less than $3 a gallon for fuel this week.

After months of skyrocketing gas prices, at least one Tucson-area service station started charging less than $3 a gallon for fuel this week.
Statewide, fuel averages fell to a six-month low Friday of $3.29 per gallon for regular fuel, according to the automobile club AAA. A gallon of regular gasoline in Tucson averaged $3.21, the lowest price in the state.
Increasing inventories of both crude oil and gasoline coupled with a reduction in demand for fuel led, in part, to the drop in prices, said Michelle Donati, a spokeswoman for AAA-Arizona. The weakening economy also contributed, she said.
The price of crude has fallen sharply since it reached a record high of $147 a barrel in July. In the three months since then, a barrel of oil has lost 47 percent of its price and on Friday it closed at $77.70.
While the price of oil has been falling since July, the cost to the consumer dropped more slowly because the oil market remained volatile, with occasional increases in the price of crude, Donati said.
Also, gas stations have been paying higher wholesale prices during the spike and had to gain back some of the money they lost, she said.
"Before they can lower their fuel prices they have to recoup their losses," she said.
Pete Jacoby, the owner of Tucson Mountain Motors, said he's been charging $2.94 per gallon since Tuesday and he expected to lower his price another 10 cents per gallon today.
Jacoby said his service center, at 3045 S. Kinney Road southwest of Tucson, has a standard markup, so when his costs go down, he passes the savings on to the customer.
"Sometimes I'm a few cents more than the Circle K down the road," he said. "And sometimes we're a few cents less."
His customers have noticed. "Everybody's thrilled," he said.
The falling gas price also reduces the pressure that credit- card processing fees put on gas station owners, Jacoby said. As the price of gas climbed, so did the interchange fee the station pays to a credit-card processing company.
As gas approached $4 a gallon, that pushed the fees toward 10 cents a gallon, and stations that typically marked up gasoline by 11 or 12 cents a gallon saw profits shrink.
Some gas station owners went far enough to charge different prices for cash and credit card transactions, Donati said.
On the East Side, Union Gas, at 7980 E. Speedway near North Pantano Road, held a promotional event Thursday and charged less than $3 per gallon. That forced a nearby FasFuel, at 8530 E. Speedway, also to drop prices below $3 for a few hours, said owner Muhammad Rana. His regular prices were at $3.08 Friday, he said.
The credit crisis sparked by the subprime mortgage fiasco has driven down energy demand.