Thursday, February 4, 2016

How Low can Fuel Prices Go?

by David Kreller of Acme Truck & Auto, Inc.

Starting with the drop in crude oil prices last year, consumers and businesses have enjoyed a continual decline in gasoline and diesel prices.  It seems that at nearly every coffee shop, diner or any other place people gather, the low fuel prices are the second most talked about topic, exceeded only by weather.

So how low can the prices go? In visiting with Pat Oppy, of Oppy’s Service, a CENEX Distributor, he shared that the industry consensus seems to believe that gasoline and diesel prices will remain at the current low levels for the next several months, maybe even trend a little lower. And while the gap between gasoline and diesel fuels have narrowed, it is likely that diesel will remain higher priced than gasoline in part because of demand and fuel taxes.

The impact of the current low fuel prices also has other implications. According to the US Department of Energy, the low fuel prices affect consumer and business spending habits. With the lower prices comes more vehicle miles traveled and use of less fuel efficient vehicles.

But with this price relief also comes some economic pain. According to the KIOGA – The Kansas Independent Oil and Gas Association, oil and natural gas activity in Kansas on average supports over 118,000 jobs, over $3 Billion in family income and over $1.4 Billion in state and local tax revenue. Lower crude oil prices not only means lower gasoline and diesel prices, but also potentially less jobs, less household income and less tax revenue for schools, counties and the State of Kansas.

So how low will they go? Only time will tell but given the current trends in crude oil production, economic forecasts, and being an election year, it seems likely the gas pumps will be a happier place for all drivers during the first half of 2016.

Acme Truck and Auto
414 South 5th Street
Manhattan, KS 66502
Office: (785) 537-1212
Toll Free (844) 537-1212

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