The average price of gas in Colorado dipped to $2.52 per gallon this week, the third-lowest price of any state in the country, according to AAA.

The drop was part of a nationwide decline, with the U.S. average falling below the $3 mark for the first time in four years last week.

Lower gas prices impact many industries, especially this time of year, when the USPS and FedEx are delivering a crush of holiday gifts and rideshare companies are taking more holiday revelers home.

But many of those industries don’t lower their prices, as the cyclical nature of gas prices means they could rise again at any time.

Still, with more cash in their pockets, consumers are expected to increase holiday spending, experts said.

Part of the reason for the price decrease is that there’s less of a demand for gas in the winter months when people do not travel as much, said Grier Bailey, executive director of the Colorado Wyoming Petroleum Marketers Association.

Additionally, Bailey said, there’s always an economic incentive for gas station owners to keep prices down, as long as they continue to make a profit.

“Gas station owners love it when the price of fuel is low,” Bailey said. “There’s more room for margin … it helps with credit card fees, it helps with cash flow, it helps with numerous other things.”

Colorado has historically had some of the lowest gas prices in the country, mainly due to its fairly consolidated population and the local Suncor refinery in Commerce City, which utilizes mostly in-state oil, said Bailey and Angie Binder, executive director of the Colorado Petroleum Association.

But as national and international affairs drive down the cost of gas across the U.S., Colorado’s price drop has largely been limited to the Front Range, said Skyler McKinley, regional director of public affairs at AAA.

“Overall spending on energy is probably higher among more rural Coloradans,” McKinley said. “But they will not be the beneficiaries of very cheap gas.”

The reason why, McKinley said, is twofold: areas outside of the Front Range are more difficult to be serviced by gas produced at the Suncor refinery — or any refinery for that matter — and intense competition between gas stations in urban areas drives down prices as they compete for the same customer base.

FRONT RANGE VERSUS RURAL COMPETITION

The competition between gas stations in the Front Range has become so fierce, Bailey said, that stations are selling the gas below wholesale cost.

These “price wars,” as Bailey dubbed it, have created an environment where Front Range gas stations are willing to take a loss on their namesake in order to attract a larger clientele.

“They’re offering the price of fuel for actually lower than what they’re buying it for from the terminals,” Bailey said, noting the aggressive tactic has become more widespread in recent years.

McKinley added that nowadays, most gas stations are making more money on non-gas goods than they are on people just filling up a tank.

“Once you stop, you might go in and get some beaver-themed jerky, and there’s pretty good margin on that,” McKinley said. “Especially if you buy some socks, maybe a soda, perhaps a hot dog.”

Anders Van Sandt, an economics professor at Colorado State University, added that, while both consumers and delivery services likely won’t change their budgets too much amid what could be a temporary drop in price, ride share drivers could see some of the bigger immediate margins.

“Uber drivers, they’re going to benefit from this,” Van Sandt said, noting that most of those drivers are in urban areas with cheaper per-gallon prices and don’t see pay adjustments when those prices change. “Gas prices decreasing will help out that gig economy.”

GAS DOWN, SPENDING UP

With soaring costs of living in Colorado and across the country, some experts believe the recent decline in gas prices along the Front Range could drive more holiday spending.

Van Sandt noted that, historically, consumers don’t spend money saved on gas right away, as it takes time to interpret whether the price drop is temporary or permanent.

But with the December holidays right around the corner, that extra cash could be spent more quickly.

“These are competing factors. We expect the economic uncertainty to delay the spending of these savings, and then the holiday season would speed up the spending of these savings,” Van Sandt said. “It just depends on individual households and their finances, how they navigate that.”

“If you have a lot of income, then the savings will not affect your discretionary spending that much … we’re not going to see a huge change in their consumption behaviors,” Van Sandt said. “We really start to see that change in the medium- and low-income groups, especially in that latter group where it has the largest impact.”

Additionally, Van Sandt said, lower-income consumers are more likely to spend those savings faster than higher-income ones, as the additional money could be put to use for other necessities such as food or housing.

LONG-RANGE IMPACTS

Rural residents will likely have greater savings than those on the Front Range, as they generally rely more on cars than public transportation and have to regularly drive greater distances, Van Sandt said.

McKinley agreed, but noted that, while savings could ultimately be higher per family, people in rural areas won’t see as great of a drop in prices per gallon as those in the Front Range.

“People in rural environments tend to be lesser beneficiaries of those low, low prices,” McKinley said.

Van Sandt, Bailey and McKinley highlighted the volatility of the oil market and noted that, by the end of the year, there’s a good chance prices are back up to a level most Coloradans are used to seeing.

“There’s always upward pressures and downward pressures, generally speaking,” Bailey said. “The biggest factor, the gorilla in the room, is supply and demand and competition.”