Tags: gas prices | Energy Information Center | fracking | OPEC

NYT: Gas 'Not That Cheap' Compared to Last 30 Years

By    |   Wednesday, 28 Jan 2015 02:55 PM

Think you're paying less at the gasoline pump these days than ever before? Think again.

When adjusted for inflation, the price of regular gas at the nation's pumps, averaging $2.03 per gallon, actually is higher than it was at any time in the 1990s, The New York Times notes.

Over the past four months, consumers have seen their dollars stretch farther every time they fill up their tanks, but the effect is largely an illusion, the Times reports, stating, "over a 17-year stretch from the start of 1986 to the end of 2002, the real price of gas averaged just $1.87."

Still, enjoy it while it lasts. The U.S. Energy Information Center (EIC) reports that while families are spending less for gas and oil these days, higher gas prices will be coming, certainly within the next two years.

"The average household is now expected to spend about $750 less for gasoline in 2015 compared with last year because of lower prices. The projected regular gasoline retail price increases to an average of $2.72/gal in 2016," the EIC states.

EIC estimates that regular gas prices, which averaged $3.36 per gallon in 2014, will average out to $2.33 per gallon in 2015 and climb back to $2.72 per gallon in 2016.

The price of a barrel of crude oil is expected to continue to drop from a monthly average of $62, the December price level and the lowest price since May 2009, after six consecutive months of lower per-barrel prices, to $58 per barrel in 2015, before rising again to $75 per barrel in 2016.

"The December price decline reflects continued growth in U.S. tight oil production, strong global supply and weakening outlooks for the global economy and oil demand growth," the EIC notes.

"Gas is not actually that cheap, at least not when compared with its level for much of the last 30 years," the Times notes.

"Energy costs are a major expense for most middle-class and poor families, taking a chunk out of their real, that is, inflation-adjusted, wages."

Increased production from U.S. wells and shale oil and Canadian oil sands, coupled with slow European and Chinese industrial growth and fuel use have changed the supply/demand equation, meaning more, cheaper oil available on the world's markets, oil expert Daniel Yergin of research firm HIS wrote in the Times.

"By the end of 2014, oil production in the United States was 80 percent higher than it had been in 2008. The increase of 4.1 million barrels per day was greater than the output of every single OPEC country but Saudi Arabia," he said.

At the same time, Saudi Arabia and other Gulf countries in OPEC have declined to cut supply, another factor in keeping prices low.

However, the Times notes: "Production is likely to begin declining in the second half of the year, and then crude prices will also begin to recover."

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When adjusted for inflation, the price of regular gas at the nation's pumps, averaging $2.03 per gallon, actually is higher than it was at any time in the 1990s, The New York Times notes.
gas prices, Energy Information Center, fracking, OPEC
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2015-55-28
Wednesday, 28 Jan 2015 02:55 PM
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