A new government report is forecasting that the average price for a gallon of regular gasoline in 2015 will be $2.94.
It seemed like quite a big deal when the national average for gasoline dipped under $3 recently. The price of the average gallon of regular had started with a $3 from late December 2010 all the way until the beginning of November 2014, when at long last it dropped below the mark. The national average as of Thursday, according to AAA, is $2.917, and some states, such as South Carolina and Tennessee, are averaging under $2.70.
According to a report this week from the federal Energy Information Administration, it looks like sub-$3 gas prices will be sticking around for a while. The report projects that gas prices will keep declining through the end of the year, with a national average of $2.80 expected for December. And the average for 2015 as a whole is being forecast at $2.94 per gallon.
The retail price of gasoline is tied to the wholesale price of crude oil, and due to bountiful supply and shrinking demand, the EIA is predicting that the cost of crude will average $77.75 per barrel next year, compared with $95 in 2014 and $97.91 in 2013. Accordingly, prices at the pump are expected to be cheaper in 2015—averaging $2.94, compared with $3.39 this year and $3.51 in 2013.
If the forecasts hold up, by December the national average will have dropped 90¢ from the 2014 high, and the 2015 average will be roughly 70¢ lower than that of 2012—when it was $3.63, the overall most expensive year (thus far) for gasoline.
Its cause is currently unknown
Emergency officials in Moscow are urging residents in certain areas to stay inside as a noxious gas makes it way through the Russian capital.
The cause of the gas is unknown, the BBC reports. No chemical factories in the area have yet reported any accidents. Local media reports suggest the gas is hydrogen sulphide, which can be very toxic and whose smell resembles rotten eggs.
The gas has been detected in the eastern, south-eastern and central parts of the city, as well as in certain shopping districts and around a government building.
Denton, Texas, passed high-profile ban on hydraulic fracturing
A record number of proposed bans to the controversial oil and gas drilling technique known as fracking were included on local ballots countrywide Tuesday. Out of eight proposed bans, four passed, in Ohio, Texas and California.
Perhaps the unlikeliest victory for anti-fracking activists was in Denton, Texas, a town north of Dallas situated in what one activist called the “cradle” of the U.S. oil and gas boom. The ban, which forbids the process of setting off large explosions underground in oil and gas drilling operations, passed with nearly 59% of the vote.
Denton is the first municipality in Texas to have passed a fracking ban–even despite heavy spending by the oil and gas industry to defeat the measure that the Denton Record Chronicle called it “the most expensive campaign in Denton’s history” by far.
“People in Denton rallied together and did some amazing organizing to pass a ban,” said Mark Schlosberg.
A legal challenge to the ban is all but assured, reports the Texas Tribune. Three of five similar bans passed in Colorado in recent years were overturned in local district court.
Fracking bans were also passed in Mendocino and San Benito counties in California, and in Athens, Ohio, while voters in Santa Barbara, California, and in the Ohio towns of Kent, Gates Mills and Youngstown rejected proposed fracking bans.
It's been nearly four years since the national average for a gallon of regular gasoline started with a $2. But on Saturday, we'll drop below the $3 mark.
That’s according to AAA, which measured the national average at a flat $3 (actually $3.003) as of Friday, and forecasts that the run of 1,400+ days of $3+ gasoline will end as of Saturday, November 1, 2014. The last time the price of a gallon of regular gas was under $3 nationally was December 2010.
Gas prices have been dropping roughly 1¢ per day lately, and the national average right now is about 70¢ less than the high for 2014, reached in spring. AAA notes that after the steady autumn decline in prices at the pump, more than 6 out of 10 U.S. gas stations are already selling gasoline starting under the $3 mark.
Like the Dow hitting 17,000, the fact that gas prices are dropping below the $3 milestone may sound impressive, but when viewed clinically and dispassionately, it’s not that big of a deal—a tiny incremental shift that’s part of a larger trend, not some big and sudden change—and it probably shouldn’t cause you to alter your behavior in the slightest. Sure, there’s a subconscious mental bump consumers get when gas prices start with the number $2, and perhaps some dollar stores and discount chains will benefit during the holiday season because low-income consumers will be able to spend a little more freely because the cost of fueling up is down. And yes, retailers and the economy in general will fare better when gas prices are in the $3 vicinity rather than the $4 or $5 range.
Overall, however, the effect on the economy of decreasing gas prices—even gas prices dropping below $3—is expected to be minimal, due in part because few anticipate fuel costs staying at such depressed rates for long. “Paying less than $3.00 for gas is a welcome holiday gift that may not last nearly as long as many would hope,” Bob Darbelnet, CEO of AAA, said via press release. “It is possible that lower gas prices will soon be a faded memory, so enjoy it while you can. The days of paying more than $3.00 per gallon for gas have regrettably not gone away.”
The tradeoff for later sunsets during daylight saving time is that you're more likely to be out and about, dropping cash.
At 2 a.m. on Sunday, November 2, the observation of daylight saving time will end and the clocks will “fall back” to the standard time, 1 a.m. Despite the fact that the shift grants the vast majority of Americans a much-welcomed extra hour of sleep, many would prefer to do away with the twice-annual time change.
Arizona and Hawaii already don’t bother with daylight saving time, and it looks like Utah could be next. In an online survey that collected more than 27,000 responses, two-thirds of Utahns favored staying on Mountain Standard Time year-round, like Arizona does. “Convenience really stood out” as a major reason why folks want to get rid of daylight savings, the leader of a government committee studying the topic explained to the Salt Lake Tribune. “People don’t want to move their clocks forward, backward … They just want to set them and leave them.”
OK, so doing away with daylight savings would make life simpler—but only very slightly so, since our computers and smartphones and other gadgets change their clocks automatically. More important, what’s the argument to keep daylight saving observation in place?
Daylight saving time was first embraced during World War I, when the idea was that the spring shift would help conserve coal because people would need less light and heat since they had more daylight during their waking hours. The concept that daylight saving saved on energy costs persisted for decades but has recently been declared patently false. Later sunsets during the warm months mean a higher likelihood that Americans will spend their evenings driving around and doing stuff, meaning more need for gas and air-conditioning during waking hours.
The ability for Americans to be out and about enjoying the later sunset amounts to an economic stimulus, because odds are we’re spending more money when we’re out. Michael Downing, a Tufts University professor and author of Spring Forward: The Annual Madness of Daylight Savings, explained to The Takeaway public radio program that the main beneficiaries of daylight saving include the golfing, tourism, and recreation industries—all of which attract more business when there’s more daylight after the traditional work day is done.
For that matter, all manner of shops and small businesses love what’s perceived to be a longer day, because it pushes consumers outside later into the night. “Since 1915, the principal supporter of daylight saving in the United States has been the Chamber of Commerce on behalf of small business and retailers,” said Downing. “The Chamber understood that if you give workers more sunlight at the end of the day they’ll stop and shop on their way home.”
A Tufts blog post noted that in 2005, daylight saving time was expanded from seven to eight months, including the key step of delaying the “fall back” until the first week of November—a move spurred on thanks to pressure from lobbyists supporting candy manufacturers and convenience stores. Why would they want such a change? Kids would get an extra hour of daylight for trick-or-treating, meaning more candy consumption and more candy purchases. Later sunsets for more of the year also mean more people out on the roads needing to swing by convenience stores to gas up or grab snacks.
As a result of these changes, we somewhat bizarrely now observe daylight saving for the vast majority of the year. “Today we have eight months of daylight saving and only four months of standard time,” Downing said. “Can you tell me which time is the standard?”
To some extent, the autumn return to standard time balances things out. With earlier sunsets, we’re out on the roads less, and therefore there’s less need to gas up the car. So there’s some savings there. Still, for much of the country, people wouldn’t be playing golf or having barbecues or visiting national parks anyway at that time of year because it’s just too cold.
And remember: Daylight saving is eight months of the year, versus only four months for “standard” time. Also: While daylight saving serves as an economic stimulus for two-thirds of the calendar year, standard time has its own epic consumer stimulus, in the form of Black Friday and the ever-expanding holiday shopping season.
"There is now no reason for people in Europe to stay cold this winter"+ READ ARTICLE
(BRUSSELS) — Moscow and Kiev on Thursday clinched a multi-billion dollar deal that will guarantee that Russian gas exports flow into Ukraine and beyond to the European Union throughout the winter despite their intense rivalry over the fighting in eastern Ukraine.
EU Commission President Jose Manuel Barroso, whose offices mediated the talks for months, said the EU will also help cash-strapped Ukraine with the payments through aid and guarantees.
“There is now no reason for people in Europe to stay cold this winter,” he said. Barroso added that he was “hopeful that the agreement can contribute to increase trust between Russia and Ukraine.”
EU energy chief Guenther Oettinger said that “we can guarantee a security of supply over the winter,” not only for Ukraine but also for the EU nations closest to the region that stood to suffer should the gas standoff have worsened.
A similar standoff in 2009 had caused serious disruptions in gas flowing from Russia into the EU and it was a prospect the bloc sought to avoid.
The agreement long hinged on the question whether Ukraine was in a position to come up with the necessary cash to pay for the gas. “Yes, they are,” a confident Oettinger said. Oettinger said the $4.6 billion deal should extend through March.
“We can claim and pay for amounts that we need. That question has been totally settled,” said Yuriy Prodan, Ukrainian Minister for Energy. “There will be no problems.”
Under the deal, Ukraine would pay for its outstanding debt by making a $1.45 billion deposit without delay, and $1.65 billion by year’s end. The final sum of debt would be determined through arbitration.
For new gas, Russia will only deliver after pre-payment and Ukraine intends to buy some $1.5 billion by the end of December.
The EU said in a statement it had been “working intensively” with international institutions and Ukraine to secure funds to pay for gas delivery in the coming winter.
“Unprecedented levels of EU aid will be disbursed in a timely manner,” it said.
The deal only stretches through March and the difficulties of the talks were immediately evident when the Russians and Ukrainians started disagreeing on terms and prices of gas for next summer.
Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, agreed earlier this month on the broad outline of a deal, but financial issues, centering on payment guarantees for Moscow, had long bogged down talks.
But with each week, the need for a resolution becomes more pressing, since winter is fast approaching in Ukraine, where temperatures often sink below freezing for days.
Russia cut off gas supplies to Ukraine in June after disputes over Russia’s annexation of Crimea in March. Ukraine since then has been relying on gas transfers from other European countries and its own reserves.
Lower fuel costs helped Spirit Airlines' stock soar this week, and may even mean cheaper flights for travelers. Just don't expect Spirit's fees to disappear anytime soon, or ever.
A sizable chunk of travelers hate Spirit Airlines and its cramped-seat, a la carte, fee-crazed business model. In a new MONEY poll, voters prefer the option of flying with snakes on a plane over flying on a Spirit plane. Yet investors sure are loving the company’s third quarter results, which were made public on Wednesday. Spirit’s adjusted net income for the quarter is up 28% year-over-year, while total operating revenue was up 14%. The results bumped the price of Spirit stock up more than 7% on Wednesday, and Morgan Stanley just named Spirit its top growth airline pick for investors.
What’s particularly interesting is that Spirit’s performance and its plans for expansion are likely to benefit non-investors as well. The airline’s sales pitch to travelers is based almost exclusively on the low prices of its “Bare Fare” flights, and analysts see the stars aligning that will allow Spirit to cut base fares even lower. It’s possible that this turn of events could even help out travelers who would never fly with Spirit Airlines—because other carriers may feel forced to scale back fares, or at least slow the pace of fare hikes, in order to compete with Spirit’s cheaper flights.
Only three weeks ago, Spirit stock dipped significantly because of fears that higher company costs—including tax payments and the hiring and training of more pilots—would be headwinds getting in the way of higher profit margins. Yet a Motley Fool post pointed out this week:
Looking ahead to Q4 and 2015, these cost headwinds are likely to turn into tailwinds due to 1) lower jet fuel prices; 2) faster growth; and 3) a shift toward larger, more efficient aircraft.
Airlines typically spend about 30% of their revenue on fuel. So when gas prices drop like they have been lately, it’s a huge deal for the airline industry. For the most part, airlines will simply pocket the fuel-cost savings rather than pass any of it along to travelers in the form of cheaper flight prices.
But there’s reason to believe that Spirit Airlines is different. After all, the airline’s main (only?) selling point is that the base price of flights is cheap, so it will lower fares to attract more customers whenever a price cut can be justified. In addition to lower fuel costs, Spirit is expanding rapidly (28 new routes added between August 2014 and April 2015), and has been getting more productivity out of planes and employees. All of which helps the company lower costs—and enables it to make its product more attractive to customers by lowering prices.
In a conference call with investors yesterday, Spirit CEO Ben Baldanza said that’s essentially what the airline plans on doing. “The customers we seek to attract overwhelmingly ranked total price as the most important variable when choosing an airline,” Baldanza said. As Spirit manages to keep the costs of fuel and other expenses low, “that’s a great thing for our model, and that means even lower fares for customers and a good thing for investors.”
And who knows? Spirit’s expansion and low-fare strategy may very well compel the larger airlines to compete more on flight prices as well. Now that fuel prices are shrinking and airlines are enjoying record-high profits, it certainly wouldn’t kill them to do so.
This week, the national average for a gallon of regular should hit $3, a low that hasn't been reached since 2010. That means consumers will have more money to spend during the holidays, right?
Not so fast.
Yes, gas prices have been plummeting in the U.S., bringing much-welcome relief to household budgets. Average prices around the country reached a new low for 2014 recently, and then just kept on falling, hitting a low not seen since 2010. As of Monday, according to AAA, the national average stood at $3.04 per gallon after falling 32 days in a row, making prices at the pump 25¢ cheaper compared to the same time one year ago. With prices falling roughly 1¢ per day (the average was down to $3.03 on Tuesday), we’re on pace to reach the all-important psychological mark of $3 per gallon by the end of this week.
But let’s step back. Is the $3 mark—and cheaper gas prices in general—really all that important for the economy as a whole?
A GasBuddy post crunched some numbers, and found that Americans are collectively saving $110 million per day on gas compared to what we spent a year ago. The timing of decreasing gas prices would seem to bode well for retailers, which are hoping that some of that money that’s not being spent on gas will be spent instead on holiday purchases in the weeks ahead. Data from the research firm Deloitte indicates that retail holiday sales will rise 4% to 5% this year, or perhaps even higher considering that the average household could spend $260 less on gas for 2014 as a whole.
“A drop in gas prices should be great for Ross Stores, Walmart, and dollar stores (for consumers who must live paycheck to paycheck),” she said. “This also helps low-cost teen retailers, as most teens have a finite amount of money and they will usually opt to put gas in their cars before buying other things.”
Overall, however, cheaper gas prices shouldn’t necessarily be viewed as a holiday season savior for retail. As a recent Fortune post pointed out, gas prices had already begun their downward trajectory in September, but the month was basically a dud in terms of consumer spending. The effect of cheaper gas on holiday spending is expected to be minimal as well. At the higher end of the income spectrum, shoppers aren’t going to alter holiday spending based on gas prices shifting by 10% or even 20%. For middle- and low-income earners, stagnant wages, weak hiring, and higher costs for housing and health care are likely to far outweigh any “savings” that come via cheaper gas prices.
What’s more, as a Bloomberg News story noted, today’s shoppers have grown so accustomed to huge discounts that they’re programmed to ignore all but the most dramatic price slashings and promotions. Add in that over the past few years, drivers have seen gas prices retreat, rise, then retreat and rise again, so there’s an appropriate level of skepticism concerning the idea that we could be paying less for gas for the long haul.
Few people will head promptly to the mall and splurge because the price of a gallon of gas drops by a few pennies. Nor should they.
The average price at the pump is currently $3.08 a gallon, the lowest it's been since Dec. 2010
The average price of gas at pumps across the country have dropped to a near four-year low of $3.08 a gallon, according to a recent survey.
The price has dropped by 29 cents since last year and represents the lowest average cost of gas since Dec. 17, 2010, according to the Lundberg Survey released Sunday. Gas prices have been steadily falling in recent months and are expected to continue to decline amid increasing oil production in the U.S. and abroad.
“The crude oil price crash has been passed through by refiners,” Trilby Lundberg, president of Lundberg Survey, told Bloomberg News. “Retailers will probably be pressed to pass through at the pump a few more pennies of price-cutting sometime soon.”
The cheapest prices could be found in Memphis, Tenn., where gas was going for an average of $2.73 a gallon, according to Lundberg. San Francisco has the most expensive gas, at an average of $3.45 a gallon.
The Lundberg Survey tracks prices at some 2,500 gas stations across the lower 48 states.