Tag: Gasoline Prices

Gas Prices – Lower Costs at the Pump

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About a year ago, the price for a barrel of oil dropped like a rock. Consumers salivated because they knew lower gas prices were on the horizon. In the 2015 cber.co Colorado Economic Forecast it was projected that consumers would save an average of one dollar a gallon from lower prices at the pump, or a total of $780.

The following calculations were made to determine the difference in cost to purchase gasoline for the periods July to June (2013-14 and 2014-15). The annual cost assumes that a person fills a car with 15 gallons of gas per week, or 780 gallons per year.

The costs and the savings for the United States are listed below.
2013-14
• 780 gallons, average price per gallon $3.51
• Total cost = $2,774.69
2014-15
• 780 gallons, average price per gallon $2.88
• Total cost = $2,281.63
• The 2014-15 costs were $493.05 less than 2013-14.

gas prices

The costs and the savings for Colorado are listed below.
2013-14
• 780 gallons, average price per gallon $3.41
• Total cost = $2,692.02
• The costs in Colorado were $82.67 less than the U.S.
2014-15
• 780 gallons, average price per gallon $2.80
• Total cost = $2,213.51
• The costs in Colorado were $68.12 less than the U.S.
• The 2014-15 costs were $478.51 less than 2013-14.

Check back in six months to see if gas prices remained low and how much lower they were than last year.

Source: EIA.gov – All Formulations and All Grades.

Lower Gasoline Prices Save $45 in 2014

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In mid-April 2012 the price for a gallon of gasoline was just under $4.00. It slowly declined through mid 2014 to about $3.80 in the U.S. and Colorado. At that point it went into a freefall and closed the year at about $2.40 per gallon.

The Savings
• For 2014 the cost to purchase 15 gallons of gasoline per week in Colorado was $2,659 compared to $2,704 in 2013. In other words, the “savings” was $45 for the year.
• For 2014 the cost to purchase 15 gallons of gasoline per week in the U.S. was $2,696 compared to $2,788 in 2013. The savings was $92 for the year.
• For 2014, the cost to purchase 15 gallons of gasoline per week in Colorado was $37 less than the U.S.

The Good News – Lower gasoline prices may increase discretionary income for consumers. It may decrease the cost of other goods, if businesses pass along their savings for lower fuel costs. In Colorado, the thought of greater discretionary income may be nothing more than a dream for many as inflation, particularly for housing costs, has risen.

The Not So Good News – Typically, the impact of lower oil and gasoline prices on the state is negative. In other words, consumers will benefit; however, state coffers will not be as full because tax collections will be lower.

There is no free lunch!

gasoline prices

Colorado Jobs and Economy Remain Strong

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On December 20th the BLS will provide their final 2014 Colorado jobs report.

Given the strength of the U.S. job growth reported earlier this month (321,000 jobs added), it is reasonable to think there will be solid job growth for November. While the economy has had its ups and downs, job growth remains solid, and is trending upwards.

The upcoming press release is somewhat irrelevant because the BLS will release the 2014 benchmark revisions in early March of 2015. That data is expected to show that the number of Colorado jobs increased by about 73,000, or 3.1%, during 2014.

The BLS began producing state employment data in 1939. The Job growth of 73,000 jobs in 2014 will be the tenth best year in terms of absolute job growth (the number of jobs added). On the other hand, 2014 will be the 38th best year in terms of relative job growth (percentage of job growth).

This year marks the only time that Colorado jobs have increased at an accelerating rate for four consecutive years. Between 2011 and 2014, Colorado has added about 231,000 workers (36,300 jobs in 2011; 54,400 jobs in 2012; 68,100 jobs in 2013; and 73,000 jobs in 2014.)

Looking ahead to 2015:
• The price of oil has declined precipitously because supply exceeds demand. As a result the price for a gallon of gasoline has dropped well below $3.00 per gallon. To date, the short-term impact of lower gas prices has been minimal. If prices remain low, Colorado’s frequent fuelers will realize savings of about $500 to $600 next in 2015. Because wage growth has been weak over the past four years, most people will not use the savings for discretionary purposes. Rather they will pay for rent, food, medical costs, and other necessary expenses that have risen at a rate faster than their wages.
• In the short-term (first half of 2015) lower oil prices may not have a significant impact on production and the number of workers in Colorado’s extractive industries. If prices are suppressed for an extended period, then production will fall. Initially, contractors and engineers will be laid off and production workers will be furloughed. Eventually smaller companies and suppliers will be impacted. The extractive industries have a comparatively small direct workforce; however, they indirectly touch many industries. They have a much bigger role in the Colorado economy than most people realize.
• A slowdown in the economies of China, Russia, and parts of the European Union may impact Colorado companies that export products and services globally.
• Wage growth has been extremely weak, particularly given the decline in the rate of unemployment this year. Although the unemployment rate is below 4.5% (the natural rate of unemployment), upward wage pressure has been felt in only a few industries, such as construction and finance.
• Retail sales have remained solid because of increased employment and in-migration. Stronger wage growth is needed to support significant growth in retail sales.
• The downward trend in the unemployment rate is a mixed blessing. It is great that more people have jobs, but labor shortages will occur  in more industries during 2015 as the supply of trained workers is reduced.
• Health care costs will continue to be an issue in 2015. Participants in the Connect for Health Colorado program will not see minimal increases in their 2015 premiums. Unfortunately, the subsidies were reduced, which will cause costs for insurance to increase significantly for many families.
• Colorado’s housing prices continue to rise, which is good news for existing home owners. It is not such good news for renters and people moving to the state.

Despite these headwinds, there are plenty of reasons to be optimistic about the growth in the number of Colorado jobs and the overall economy in 2015.

Lower Gasoline Prices Have Minimal Impact

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Since the second quarter of 2012, the price of gasoline has slowly declined in the U.S. and Colorado.

At this point, the impact in total gasoline prices for the year is primarily psychological even though prices have dropped below $3.00 per gallon in some locations. The difference in total prices paid for 2014 compared to last year are negligible.

The Good News – At some point lower gas prices may increase discretionary income for consumers. At the moment that is not likely because inflation has driven other costs higher, especially housing costs.

The Not So Good News – Typically, the impact of lower oil and gasoline prices on the state is negative. In other words, consumers will benefit; however, state coffers will not be as full because tax collections will be lower.
gasoline prices

 

Relief at the Pump – Coloradans Saved $56 in 2013!

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Back in the day… a Hershey’s candy bar cost a nickel and a person needed a dime to get a Coke from the vending machine. (Diet Coke didn’t exist). Nickels and dimes had value back in the day.

And…it cost $.21 for a gallon of gasoline. Not only that, an attendant filled up the car, checked the oil, and washed the windows. Back in the day a car was taken to a service station, not a gas station.

Given that perspective, the current relief at the pump is still painful.

As we ring out the old year and ring in the new it is now possible to compare the annual costs of gas for Colorado and the U.S. This calculation assumes that 15 gallons of gas were purchased each week at the average price for all blends. The comparison follows:

  • Colorado
    • The 2013 cost was $2,706.
    • The 2012 cost was $2,762.

It cost $56 less to purchase gas in Colorado during 2013 than 2012.

  • United States
    • The 2013 cost was $2,782.
    • The 2012 cost was $2,874.

It cost $92 less to purchase gas in the U.S. during 2013 than 2012.

In 2013 it cost $76 less to purchase gas in Colorado than the U.S.

How is that for relief at the pump?

If you are a Coloradan, how did you spend the $56 dollars you saved in 2013?
©Copyright 2011 by CBER.

Pain at the Pump – Will it be Less in 2013?

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Since 2009 Americans have felt the pain at the pump. The angst for Coloradans has been slightly less.

For the past 52 weeks, the average cost to purchase 15 gallons of gas per week was $2,760. Believe it or not, this was about $1 more than the previous 52 weeks, not adjusted for inflation.

As well, the cost for Coloradans was about $111 less than the U.S. total for the past 52 weeks.

Sticker shock wasn’t as bad as it was two years ago. This is good news for consumers, but not so good news for the companies who rely on higher oil prices and governments who rely on severance and other taxes for revenue.


©Copyright 2011 by CBER.

Relief in the Decline of Gas Prices?

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Baseball Hall of Famer Yogi Berra said “It’s déjà vu all over again”. This famous quote originated as a result of Berra watching Mickey Mantle and Roger Maris hit back-to-back home runs on multiple occasions for the New York Yankees in the early 1960s.

Today Berra’s quote applies to the price of a gallon of  gasoline.

According to the EIA, the price at the pump has recently dropped; however, the average price for a gallon for all formulations on November 28 was $3.38, compared to $2.69 two years prior. The November price is down from a Colorado high of $3.83 in mid-May. Nationally, the price topped $4.00 a gallon for three weeks in May.

While these prices are admittedly high, Coloradans are fortunate. Over the past ten years, the price of gasoline is lower in Colorado than the U.S. average about 70% of the time.

For the period 12/1/2010 to 11/30/2011, the cost for Coloradans to purchase 15 gallons of gasoline a week would have been about $2,661. For the 52 weeks prior, costs would have been $2,101; and they would have been$1,737 for the year prior to that.

For some Americans the extra cost is an annoyance. For the unemployed, those who have gone months without a meaningful pay increase, or those who are living on fixed or limited incomes, the additional $40+ per month (for gasoline) is significant. In addition higher fuel costs are indirectly causing increases in food prices, building materials, and various consumer goods and services.

While the recent decline is welcome. “It’s déjà vu all over again”. The reprieve is only temporary.

 

 

©Copyright 2011 by CBER.

Economy Struggles as Debt Ceiling Debate Nears “Deadline”

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As the August 2 “deadline” for the debt ceiling approaches there is an abundance of articles, discussions, blogs, and editorials discussing the future of the economy. Most are dismal.

Housing – In 50 words or less, the housing market is dismal. Gary Shilling, Forbes economist, says it will drop another 20% next year. While that may not be the case in many locations, it is unlikely that Colorado will see appreciation in housing prices next year. Time, not stimulus, is the solution to the problem. Unfortunately this points to continued budget woes for schools, special districts, and local governments.

The 2012 Elections – Part of the posturing related to the debt ceiling debate has been centered around the creation of sound bites for the 2012 election. Get your wading boots on for a campaign season that will make previous ones look like a walk in the park. The advertisements and campaign speeches for the upcoming elections are likely to leave the electorate with even greater angst for our elected officials.

Investment Options are LImited – QE2 propped up the stock market for a few months, and temporarily raised consumer confidence. For the near-term, interest rates are miniscule, return on investments are low, commodity prices have fallen off. Did we mention that the housing market has tanked? There are few investment options for consumers.

Fuel Prices, One Example of Inflation – Fed Chairman Bernanke was correct when he said that the price of oil would drop. He forgot to mention that it would occur at summer’s end and it would be accompanied by a decline in the price of other commodities. The price for a tank of gas remains well above $60. Gasoline prices are just one example of inflation that will constrain consumer confidence in the months ahead.

China – The Chinese economy remains strong, but it is slowing. As their consumption decreases, there will be a corresponding decline in the demand for American goods. Like it or not, we are in a global economy and the expansion of U.S. output hinges on foreign consumption.

Unemployment Rate – In Colorado the rate has declined, which is good news. Unfortunately, there are about 230,000 people who are still not working. This is a double whammy. They are receiving financial assistance to reduce their chances of becoming destitute and they have reduced their consumption. As well, older workers are remaining in the workforce because of uncertainty about such federal assistance programs as Medicare and Social Security. This has reduced job opportunities for younger workers, which has multiple negative implications on future economic growth.

At times the dismal news makes it sound like the world is coming to an end tomorrow, fortunately that is not the case. As bad as the economy may seem, the country remains in a growth mode (barely). Despite our current economic and political challenges, the U.S. and Colorado continue to be a great place to live, work, and play.

©Copyright 2011 by CBER.

Is Inflation Giving you Gas?

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It is not your imagination that the cost to fill your gas tank is rising faster than the increases in your paycheck.

Average retail gasoline prices for all formulations has more than doubled over the past two years (Colorado and U.S).

The annual cost for Coloradans to purchase 15 gallons of gasoline a week would have been about $1,800 for 2009. Last year that same amount of gasoline cost $2,100, a 16% increase. So far this year, prices are running about 21% ahead of last year. With the summer season right around the corner, $4.00 a gallon seems a certainty.

Is $5.00 a gallon on the horizon?

For some Americans the extra cost is an annoyance. For those who have gone months without a meaningful pay increase or those who are living on fixed or limited incomes, the additional $25 – $30 per month (for gasoline) is significant.

In addition higher fuel costs are indirectly causing increases in food prices, building materials, and various consumer goods and services.

©Copyright 2011 by CBER.