Gas demand firms as prices keep dropping

Gas gets cheaper by the day

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NEW YORK (CNNMoney.com) -- Gasoline demand rose on a year-over-year basis for the first time in eight months as prices at the pump declined for the 83rd day in a row.

Demand ticked up a modest 0.3%, year-over-year, for the week ended Dec. 5, according to Tuesday's MasterCard Advisors' SpendingPulse report, which tracks national retail sales. The last time demand showed a year-over-year bump up was the week ended April 18, when it rose 3.1%. The report includes all sales, whether they are cash, check or by credit card.

That April increase could be partially attributed to the Easter calendar shift, as holidays typically translate into increased driving, said Michael McNamara, vice president of SpendingPulse.

Demand seems to be more "normal" now, McNamara said. "Prices dropped so far so fast, and aggregate national driving behavior can't change that quickly. That's why demand numbers are much more steady than price."

Gas prices have tumbled some 59% from mid-July, when they topped $4 a gallon. "There's a role reversal now. Prices moved to the backseat, economy to the front seat," said McNamara.

On a weekly basis, demand dipped 0.3%, declining for the first time in a month. But the year-over-year figures are considered more significant than weekly fluctuations.

Prices per gallon are more than $2 below their peak of $4.114 a gallon in July, "when price was the No. 1 issue, and the economy was deteriorating but not tanked yet," McNamara said. "There's a role reversal now. Prices moved to the backseat, economy to the front seat."

The holiday shopping season may bring more consumers to the pump, as a "ramp-up" occurs every year in those weeks, McNamara said. But in these volatile times, it's become difficult for anyone to predict what comes next.

"It's so hard to look forward, because there is no comparable time," McNamara said. "After the economic crisis really got started in September, all bets were off."

Regular unleaded fell 1.8 cents to $1.698 a gallon Tuesday, according to motorist group AAA's daily survey of gas station credit card swipes.

According to MasterCard's survey, prices nationwide have tumbled between 38% to 43.4% from a year earlier.

The last time prices were this low was March 1, 2004, when gas was selling at an average of $1.69. On Tuesday, average gas prices stood above $2 a gallon in only 3 states: Alaska ($2.714), Hawaii ($2.526) and New York ($2.051), according to AAA.

The price of crude oil, the primary component of gasoline, has fallen more than $100 a barrel since peaking at a record high of $147.27 in July.