It’s been just over a month since my last post on U.S. gas prices: Crude Oil Less Than Distilled Water for 2015 Holiday Season. With gas prices hovering around $2.00 per gallon, most U.S. motorists were handed a personal Christmas present.
GasBuddy.com calculates that U.S. motorists saved $134 billion on gasoline in 2015 over what they paid in 2014. Today’s average for a gallon of gasoline is $1.973 per gallon. This compares to $2.160 one year ago.
Given the uptick in prices that usually begin around March or April when refineries shift from winter to summer blends followed by the annual increase in vehicle miles travel (VMT) for the Memorial Day to Labor Day summer driving season, GasBuddy.com projects that U.S. consumers will be rewarded at the pump in 2016 by spending $17 billion less than they did in 2015.
The forecast for the U.S. economy is that gas prices will remain lower for longer. Good news again! While the average price that consumers have paid at the pump has dropped four years in a row, the cost of crude oil has proven to be a more volatile commodity. Ten years ago, petroleum engineers, geologists, chemical engineers, chemists, other STEM professionals and analysts were discussing peak oil – the belief that there was a finite reserve of petroleum that was rapidly diminishing. The impact of the peak oil discussion (that dates back at least 60 years) on crude oil prices can be seen in Figure 1.The shale oil/fracking boom and the potential for a theoretical source of methane from the ocean floor has caused many to pause and re-think the peak oil discussion. Couple this with OPEC’s failure to address over production and falling crude oil prices in 2015. The big question that everyone wants to know is whether we should expect anything differently from the petroleum cartel in 2016?
The nuclear agreement with Iran adds the potential for another source for U.S. oil imports. However, GasBuddy’s Fuel Price Outlook 2016 cites the Saudi/Iran tensions and an agreement with Iran to ease sanctions in exchange for throttling back nuclear ambitions as a possibility of unexpected turbulence in the crude oil markets.
Here’s to a great start for 2016, and happy motoring.
- Crude Oil Prices Since 1946– Historical Chart, http://www.macrotrends.net/crude-oil-prices/historical-chart/, cited in Peak Oil Over The Horizon Or An Era Of Indefinite Prolonged Surplus?, by Mark Cares for Oil Pro, January 8, 2016, http://oilpro.com/post/21394/peak-oil-over-horizon-era-indefinite-prolonged-surplus?utm_source=DailyNewsletter&utm_medium=email&utm_campaign=newsletter&utm_term=2016-01-08&utm_content=Article_9_txt