The influential Lundberg Letter estimated that the average price of a gallon of gasoline in the United States has dropped 25 cents in the past two weeks, tumbling to its lowest level in more than five-and-a-half years, according to the Lundberg survey released Sunday, while AAA said the drop in prices is expected to continue.
Prices for regular-grade gasoline fell to $2.47 a gallon in the survey dated Dec. 19, down 25 cents since the previous survey on Dec. 5, according to Lundberg, and the recent drop has taken prices down more than $1.25 a gallon since a peak in May.
“This is mostly driven by the big drop in crude oil prices and absent a sudden spike we very well may see a drop of a few pennies more,” said the survey’s publisher, Trilby Lundberg. “That said, demand is up at these low prices.”
The highest price within the survey area in 48 contiguous U.S. states was recorded in Long Island at $2.82 per gallon, with the lowest in Tulsa, at $2.06 per gallon.
The AAA Gas Gauge, which checked prices over the weekend, found that the prices had dropped to $2.40 per gallon from $2.55 last week as turmoil in the oil business continued to drive down oil prices across the globe.
In another sign pointing to lower prices for the next several, U.S. crude futures have been sharply weaker of late, dropping for four straight weeks, as well as in 11 of the past 12 weeks. Crude prices fell 14.2% during the past two weeks, though they rose 5.1% on Friday, settling at $57.13 per barrel.
The drop in the futures market also has hurt hedge funds and other investors that had counted on oil prices remaining steady between $90 and $100 per barrel or even increasing as political turmoil spread through the Middle East.
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Economists have said that the drop in oil prices is generally good for the U.S. because it leaves American consumers with additional discretionary income.
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However, the drop in oil prices also has the potential to create some economic casualties. Economists in Texas now estimate the drop in oil prices could cost the Lone Star state’s petroleum-dependent economy more than 200,000 jobs if the drop in oil prices continues during the next year.
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The Texas economy has grown more diverse in recent years, but still subject to the vagaries of the oil market, economists told the Austin American Statesman in an article published Friday.
Texas is key to truck sales in the U.S., but so far manufacturers that depend on pickup sales such as General Motors, Ford Motor Co., Fiat Chrysler and Toyota have remained optimistic about the prospects for 2015.
With fuel prices being lower for some time you’d think transportation costs would have dropped but this doesn’t seem to be the case. However courier services like UPS, FEDEX, etc. have a fuel surcharge that increase the minute there is even discussion of fuel price cost increases. I wonder if the Feds are looking into why the shipping rates have not dropped in proportion to fuel costs in the U.S.?
Shipping uses diesel primarily, I’d bet. And diesel has not dropped at all, or very little.
I doubt this drop is going to sustain for more than a few months, but if it does and Texas starts bleeding jobs, it will be interesting to see how the PTB there spin this. They’ve blathered so much about their business climate and bragged about their miracle economy, it would be entertaining to see them explain away bad news.