Feds predict under $3 gas next year
<p>Customers at area gas stations should be smiling more by next year if average gas prices fall below $3 per gallon.</p>
The U.S. Energy Department announced Nov. 12 that the average price of gasoline will be under $3 a gallon in 2015, saving U.S. consumers about $61 billion compared to this year.
The department’s monthly report forecasts global oil prices falling by $18 a barrel next year to $83. The forecasted lower prices will be the result of lower demand due to a weakness in the global economy coupled with increasing oil production in the U.S.
The department forecasts that drivers will pay $2.94 per gallon on average in 2015, about 45 cents lower than this year.
The $60.9 billion in savings may seem like a small part of the $17.5 trillion U.S. economy, but economists say it will allow consumers to spend more money on other things. Consumer spending accounts for 70 percent of the U.S. economy.
The average gasoline price in the U.S. has fallen for about a month and a half and is at its lowest point since December 2010, according to AAA, the last full year when the average came in below $3 a gallon.
Late fall is often when the price of gas hits its low for the year, and drivers are now paying $2.92 per gallon on average, according to AAA.
Adam Sieminski, administrator of the Energy Information Administration, the Energy Department’s statistical arm, attributed the lower pump prices to lower prices for crude oil and weak fuel demand. The EIA, however, cautioned that the Organization of the Petroleum Exporting Countries (OPEC) could cut production in an attempt to drive prices higher.
Oil production around the world in recent years has been strong, while a boom in the U.S. has increased domestic production by 70 percent since 2008 and the demand for fuels in Asia and Europe is growing more slowly than expected because of weak economic growth.
In addition, while the U.S. economy is faring relatively well, more fuel-efficient cars and changing driving habits are keeping domestic gasoline demand low. The EIA expects demand to fall slightly next year despite lower gasoline prices.
The EIA also lowered its forecast for growth in U.S. oil production, as lower prices are expected to force some drillers to cut back. Production is expected to reach 9.4 million barrels a day in 2015, down from a previous estimate of 9.5 million barrels per day but still an increase of 4 percent over this year and the highest domestic crude production since 1972.