Energy agency says gasoline will average under $2 in 2016
ASSOCIATED PRESS
A customer refueled her car at a Costco in Robinson Township, Pa. in July 16, 2015. The U.S. Energy Information Administration said today in its monthly short-term energy outlook that regular gasoline will average $1.98 a gallon nationwide in 2016.
For the first time since 2004, U.S. drivers are expected to pay an average of less than $2 a gallon for gasoline, the government said today.
They can thank the huge glut of oil around the globe.
The U.S. Energy Information Administration said in its monthly short-term energy outlook that regular gasoline will average $1.98 a gallon nationwide in 2016. The last time gasoline averaged less than $2 for a full year was 2004, which was also the last time gasoline at stations in some states fell below $1 a gallon.
The pump savings are a direct result of the 70 percent collapse in crude oil prices since mid-2014. Earlier today, the International Energy Agency said the supply of oil is set to outpace demand again this year, keeping a lid on any expected price increases. Global supplies could exceed demand by as much as 2 million barrels a day in the first quarter, the agency said.
“If these numbers prove to be accurate, and with the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” the IEA said.
Fueled by low prices, and an improving job market, consumption of gasoline in the U.S. rose by 2.6 percent last year to 9.2 million barrels a day, the highest level since 2007, the government said. The EIA estimates that the average U.S. household saved $660 on gasoline in 2015.
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The EIA expects benchmark U.S. crude to average $37.59 a barrel this year, down from $48.67 last year. International crude will average $37.52, down from $52.32 a barrel in 2015, according to the agency.
U.S. oil closed at $27.94 today, down percent.
16 responses to “Energy agency says gasoline will average under $2 in 2016”
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Sooo…. I should see a good drop in airfare prices too? If not, WTH? Bag fees and increase in airfare went up a decade ago due to increase in oil prices. Now with way lower oil prices… airfare should drop. Maybe they ought to be regulated again. They are gouging the consumers now… and see how much money airlines are making now!
The US airline market isn’t competitive and most airlines buy their jet fuel on years long contracts to be able to reduce volatility in earnings. So between those two, don’t expect airline prices to dramatically fall despite the largest actual costs at spot rates declining like a lead brick in water.
MDA, buying airline stocks has long been the worst investment of any industry. When the oil prices go down the Unions start their negotiations for hight pay. We, the customers, will never see the lower air prices.
Explain EasyJet then who uses union labor.
I remember a few years ago a certain politician telling Americans “we cannot drill our way out of high oil prices.” Guess we did….for now.
Prices are low far more because of Saudi Arabia’s refusal to cede market share (and using cheap oil as a weapon against US Shale, Iran and Russia), and the 12 million barrels sitting in Iranian tankers waiting to be sold. Fracking helped no doubt, but it’s not the cause of the recent drops. Remember we had huge amounts of fracking when oil was $60-80 and prices kept going up.
Yes but franking from shale became cost efficient and brought new oil to the market. Completely changed market balance. OPEC let the market get oversupplied, prices dropped, and the US is less dependent on foreign oil. All not due to anything Obama did.
At the end of the day, it’s not fracking that is driving down prices now, but Saudi Arabia, Iran and to a lesser degree, China’s declining import needs.
what happen to all the oil workers who worked in the fracking fields..some places are turning into ghost towns…and da beat goes on…
Remember in 2012 when Newt Gingrich, whom Republicans touted as a genius, predicted that if Obama were re-elected gas prices would rise to $10/gallon?
Don’t tell me you believed something Newt Gingrich said. Riddle me this, if they touted him as a genius, why couldn’t he secure the nomination for prez?
Airfare is the only thing I care about going down (which it won’t, of course.) I rarely drive and when I do, I’m more than happy to use 92 octane again for the first time in years.
Whenever the oil prices go down the WH sees an opportunity–10.25% tax hike per barrel.
Methinks you haven’t travelled much if you don’t think we need to rebuild our roads, highways and bridges.
As I replied to an earlier post, the proposed barrel tax is for newfangled crap, not to renew existing infrastructure.
Not only the airline increases that kept pace with the rising oil prices, but practically everything else rose with the rising cost of oil. Food, services, shipping everything that added to the cost of living that made life miserable. I kind of understand all this in a way. What I cannot understand is the airline’s response of not reducing the price of their fares with the reduction of oil prices. I don’t see any reduction in food prices and increased price of services. Something is definitely wrong. Just because the price of oil had dropped dramatically, doesn’t mean we can continue to get shafted by the cost of living gouging.