Can gas prices go too low for our own good?

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ST. LOUIS (KPLR) – A barrier was broken in the St. Louis area for the first time in 5 years: gas prices dropped below $2-per-gallon, Monday.

Drivers were stopping in shock and gassing up, especially drivers from out of state.

It was grab it while you can at the Herculaneum exit on Interstate 55 in Jefferson County.

"I saw the sign that said $1.99.  I said 'what, really?'  So I just pulled over.  I've got to get me gas!" laughed Dahir Warsame, who was en route from Tennessee to Minnesota.

"The $1.99 price was definitely something that made we want to stop.  Sub $2 a gallon, it's been a long time since I saw that," said Scott Wormsley headed to Tennessee from Colorado.

Prices fell throughout the day from Jefferson County to North St. Louis County.

Plunging crude prices, increased production at refineries, and competition among retailers, drove the plung, experts said.

"What you've really got going in the St. Louis market is you just have a tremendously competitive marketplace which has been going on the last 30-45 days," said QuikTrip spokesman, Mark Thornbrugh.

He said gas production had increased 80% in the past 5 years, with refineries operating at 100% capacity and crude oil prices down to $35-$36 dollars-a-barrel from record highs near $130.

"It's a huge deal for me," said Tina Poston of St. Louis, gasing up for $1.99 in Herculaneum. "I was dancing in the streets when it started going down."

She drives 130 miles round-trip from St. Louis to Ste. Genevieve for work.

"What you're seeing right now is bigger than any type of stimulus program by government officials.  If this stays where it is for a while, the average family is going to save anywhere from $750 - $1000 of their annual income, that they're not spending on gasoline. That's a lot of money," Thornbrugh said.

The price drop was good for QT, too, he said.

"We save a lot of money on the credit card fees. The other thing we know for a fact is somebody who was paying more than $1 more a gallon than a few months ago.  That's more disposable income they have, hopefully they'll come inside and purchase something with it…it may reach the point where it can cause economic downturn."

Tax revenues and energy stocks could take hits as prices continue to fall.

"People will feel it in their 401(k)'s. The various states that rely upon crude oil for severance tax will feel it," he said.

Severance taxes are usually a percentage of the crude oil price so revenues fall with the prices, he said.

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