Americans saved $14B on gasoline in 2014: Report

31 Dec 2014 | Author: | No comments yet »

AAA Says U.S. Motorists May Save $75 Billion on Gasoline in 2015.

The slide in gas prices saved Americans an estimated $14 billion in 2014 versus their 2013 gasoline tab, according to the automobile and travel group AAA.The free-fall in gasoline prices has notched another milestone — Missouri and Oklahoma are the first states since 2009 to report average prices below $2 a gallon, according to AAA.

OKLAHOMA CITY (AP) — AAA Oklahoma says the state’s average price for a gallon of gasoline has dropped to $1.98 and is the second lowest price in the nation. A global glut of crude oil and a standoff between U.S. producers and the Organization of Petroleum Exporting Countries over market share has been a boon for consumers.

That means the savings have been particularly pronounced in the run-up to Christmas. “Many drivers are saving $15-$30 every time they go to the gas station compared with a year ago,” AAA said in a statement. The average price peaked on April 28, at $3.70 a gallon, and has slid 39% to the year’s low of $2.26 a gallon on Wednesday, also the lowest price since May 12, 2009, AAA said. Oil is heading for its biggest annual decline since the 2008 financial crisis. “Next year promises to provide much bigger savings to consumers as long as crude oil remains relatively cheap,” Avery Ash, an AAA spokesman, said by e-mail today. “It would not be surprising for U.S. consumers to save $50-$75 billion on gasoline in 2015 if prices remain low.” U.S. benchmark West Texas Intermediate crude touched $52.51 a barrel today, the lowest since May 2009. They now average $1.89 on the Missouri side and a few cents higher on the Kansas side, although drivers can likely find better prices at certain locations.

Brent oil, the international benchmark that contributes to the price of gasoline imports, fell to $55.81, also the cheapest since 2009. “It’s getting lower because what happened? Nationally, gas prices averaged $2.27 with the highest state price in Hawaii at $3.53 followed by New York where motorists are paying an average of $2.80 a gallon.

We drilled in the United States,” Peyton Feltus, president of Randolph Risk Management in Dallas, said today in a telephone interview. “We’re buying more of it from ourselves, which is a great economic multiplier.” There is “significant uncertainty” over the cost of crude next year as lower prices may force companies to curb production and may also lead to instability in other oil-producing countries, the motoring group said. It put the number at $50 billion to $75 billion, or as much as $234 per person Prices at the pump have now fallen for a record 97 straight days, AAA added. Gas prices in the U.S. have declined for 95 consecutive days, and November’s decision by OPEC to not reduce oil production has caused oil and gas prices to drop even faster. The average U.S. household will save about $550 on gasoline costs next year, with spending on track to reach the lowest in 11 years, the Energy Information Administration said Dec. 16. “They’ve got more disposable income and they’re going to have even more in the coming months,” Feltus said. “Gasoline prices are going to go lower than anybody thought they could.”

The odd occurrence made me think about how gas prices have changed in the last few years, and American motorists have become conditioned to paying whatever it takes. AAA said prices nationwide could fall another 10 cents per gallon over the next two weeks, even if oil prices stabilize, as gas prices catch up with the drop in crude. The state’s low gas taxes and access to plenty of fuel flowing from the Gulf Coast and regional refineries have combined to push prices to a nationwide best.

Cap-and-trade revenues from fuel alone should bring in about $1.7 billion to California in 2015, said Severin Borenstein, professor of business administration and public policy at UC Berkeley’s Haas School of Business, in an August article. Steve Mosby, a partner in Admo Energy which helps fuel retailers buy fuel to resell, has never seen anything in his decades-long career as dramatic as the recent decline in fuel prices. Finished goods from factories that U.S. companies built overseas to take advantage of cheap labor and lower taxes wouldn’t get to market here or elsewhere.

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