The Times West Virginian

Headline News

January 11, 2013

Gasoline prices predicted to fall in 2013

Annual bill expected to drop for the first time in four years

NEW YORK — At least gasoline should cost you less in 2013.

Hamburger, health care and taxes are all set to take a bigger bite out of the family budget this year. But drivers’ annual gas bills are expected to drop for the first time in four years.

Forecasters say ample oil supplies and weak U.S. demand will keep a lid on prices. The lows will be lower and the highs won’t be so high compared with a year ago. The average price of a gallon of gasoline will fall 5 percent to $3.44, according to the Energy Department.

“Everything is lining up to lead to softer prices this year,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.

That would still be the third-highest average price ever. But a discount of 19 cents per gallon from 2012 would save the typical household $205 this year and free up $25 billion that could go instead to restaurants, malls or movie theaters — the kind of consumer spending that accounts for 70 percent of American economic activity.

“It’s a little benefit to the economy, and it’s a little more reason the Fed doesn’t have to worry about inflation,” said James Hamilton, an economist at the University of California at San Diego who studies energy prices.

Forecasters caution that they can’t predict other factors like Middle East tensions, refinery problems or hurricanes along the U.S. Gulf Coast — in other words, the same events that caused gasoline prices to spike in 2011 and 2012. Any or all of those troubles could crop up again in 2013 and push pump prices above last year’s record average of $3.63 a gallon.

The government expected gas to average about $3 during 2011. Then came the Arab Spring, which included the shutdown of Libya’s oil production. Oil prices shot up, and gasoline averaged $3.53 for the year. The government’s forecast for last year also turned out to be too low, by 18 cents per gallon.

And, Hamilton said, consumer spending might not see a boost from lower gasoline prices because most Americans will be paying higher taxes. The expiration of last year’s payroll tax reduction will cost an extra $579 for households making $40,000 to $50,000 in 2013, according to the Tax Policy Center, a non-partisan Washington research group.

But after average gas prices rose in 2010, 2011, and 2012, a little relief will be welcome in 2013.

Gas prices set records each of the past two years for a few reasons. Global demand has risen as the developing economies of Asia, Latin America and the Middle East burn more gasoline, diesel and jet fuel. At the same time, unrest in the Middle East has sparked fears of widespread supply disruptions in a region that produces a quarter of the world’s oil. That makes traders willing to pay higher prices up front for oil as a way to protect against possible dramatic price spikes in the future.

In the U.S. last year, several refineries and pipelines had problems that reduced gasoline supplies, especially on the West Coast and in the Midwest, helping to push pump prices even higher.

This year, global oil demand is expected to rise slightly again, but increased production, especially in the U.S., should keep supplies ample. The U.S. Energy Information Administration said this week that American production will grow next year by 900,000 barrels per day, the nation’s biggest single-year increase ever. By 2014, U.S. production will reach its highest level since 1988.

At the same time, U.S. gasoline consumption is back down to 2002 levels because of more fuel-efficient cars and the tepid economy. It isn’t expected to rise this year or next, according to the Energy Department.

That means the U.S. will need to import less oil, which will increase global supplies and help tamp down prices somewhat.

The current average retail price of gasoline is $3.31 per gallon, 6 cents lower than last year, according to AAA, OPIS and Wright Express. AAA predicts gas won’t surpass $3.80 a gallon this year.

The peak last year was $3.94, reached in April. The auto club also says average pump prices could drop as low as $3.20, a level that the country hasn’t seen since February 2011.

Tom Kloza of OPIS expects price differences between regions of the country will remain large, and local prices could be volatile as supplies build and dwindle. In Utah, drivers are paying $2.88 per gallon on average, while in New York drivers are paying $3.75. Just in the last four months, gasoline supplies on the West Coast fell to their lowest level in a generation, then rose to where they are now, their highest level in a generation.

AAA forecasts the national average will peak between $3.60 and $3.80 in the spring, then drop to between $3.20 and $3.40 by mid-summer. It will rise again during the hurricane season along the Gulf Coast, the nation’s oil-refining hub, before moving lower toward the end of the year.

It’s that up-and-down movement that will dictate drivers’ moods. Drivers tend to remember what they paid for their last fill-up — not that they may have paid a little less a year ago, Hamilton said.

“People have a short reference point,” he said.

1
Text Only
Headline News
  • Contract dispute delays ‘Big Bang Theory’ production

    Production on a new season of “The Big Bang Theory” is being delayed because of a contract dispute with its top actors.

    July 30, 2014

  • What’s a group selfie? An usie

    What do you call a group selfie? An usie, of course!

    July 30, 2014

  • Senate changes House bill for highway funds

    The Senate on Tuesday voted to change the funding and timing of a House bill to keep federal highway funds flowing to states in an effort to force Congress to come to grips with chronic funding problems that have plagued transportation programs in recent years.

    July 29, 2014

  • State close to national average in credit card debt

    Credit card debt may have reached its lowest level in a decade, but according to a recent study on personal debt vs. income, just as more people are paying off their credit card debt monthly, nearly the same number of people are being reported for unpaid bills.

    July 29, 2014

  • New VA secretary confirmed by Senate

    The Senate on Tuesday unanimously confirmed former Procter & Gamble CEO Robert McDonald as the new Veterans Affairs secretary, with a mission to overhaul an agency beleaguered by long veterans’ waits for health care and VA workers falsifying records to cover up delays.

    July 29, 2014

  • W.Va. man arrested after child found in hot car

    A Wheeling man faces charges that he left his 18-month-old daughter in a hot car while he was asleep on a couch.

    July 29, 2014

  • Board to meet on dangerous animals list

    CHARLESTON (AP) — A board tasked with compiling a list of animals that are illegal to keep as pets in West Virginia will consider one that’s shorter than a list suggested earlier.

    July 28, 2014

  • Clinton impeachment shadows GOP lawsuit against Obama

    The last time Republicans unleashed impeachment proceedings against a Democratic president, they lost five House seats in an election they seemed primed to win handily.

    July 28, 2014

  • Study: Fist bumps less germy than handshakes

    When it comes to preventing the spread of germs, maybe the president is on to something with his fondness for fist bumps.

    July 28, 2014

  • Obama Exporting Pollu_time.jpg ‘Not in my backyard’: U.S. sending dirty coal abroad

    As  the Obama administration weans the U.S. off dirty fuels blamed for global warming, energy companies have been sending more of America’s unwanted energy leftovers to other parts of the world where they could create even more pollution.
    This fossil fuel trade threatens to undermine President Barack Obama’s strategy for reducing the gases blamed for climate change and reveals a little-discussed side effect of countries acting alone on a global problem. The contribution of this exported pollution to global warming is not something the administration wants to measure, or even talk about.

    July 28, 2014 1 Photo

House Ads
Featured Ads