Christmas has come early for those of us who like to, and have to, drive long distances.
If you’ve been wanting to jump in your car and take a long trip to Los Angeles or Phoenix, now is one of the best times you could hope for. Gas prices seem to be in a free-fall as they are below $3 for the first time many of us can remember.
These are prices many of us thought we’d we never see again.
On Thursday, the station in front of Gold Town Casino was down to $2.33 per gallon. The Nevada per gallon average is $2.82, higher than the national average of $2.62. Gas prices this week are dropping on average 2 cents per day.
To put the drop in historical perspective, in August 2013 the national per gallon average was $3.54. In August this year it was $3.44. Boom!
According to AAA, this is the first time national gas prices have dropped below $3 in four years. This is driven by a drop in crude oil prices, which hit $59.95 a barrel to be delivered in January, the lowest level in five years.
In Southern Nevada, gas prices have dropped 55 cents a gallon since December 2013 and are forecast to keep dropping.
Despite continued unrest in the oil-rich Middle East, there are explanations for this steep drop.
First is domestic oil production is at 7.4 million barrels per day, up from 5.6 million per day three years ago, according to the U.S. Energy Information Administration. Production is expected to increase to an average of 9.5 million per day next year.
This is coupled with American consumers using less oil as technology becomes more efficient, including drivers driving increasingly energy efficient vehicles. I myself just bought a 2014 Chevy Malibu which obtains much better mileage than my 2001 Honda Civic did at the end.
And the world economy has yet to fully recover, leaving large users such as China unable to use large quantities of oil. And with prices suppressed, it hurts our adversaries who rely on oil export revenues for their national economy. I’m looking at you, Russia.
Supply and demand.
For people here in Pahrump, which is geographically isolated from many entertainment options offered over the hump, movies come to mind, maybe residents will make more trips to Vegas than they might have prior.
If you don’t want to hit the road, the decline in gas prices is likely giving you extra cash for the holidays. The drop is a boost to the economy, according to various economists.
Stephen Stanley, chief economist of Amherst Pierpont, told CNN Money that “every penny that gas prices decline puts about a billion dollars into Americans’ pockets.”
Stephen Brown, director of the Center for Business and Economic Research at UNLV’s Lee Business School, said at the university’s Economic Forum the four-year low in gasoline prices is acting like a mild economic stimulus for the nation with the average American household having an extra $2,400 a year to spend when gasoline hits its predicted low national average of $2.50 a gallon by January.
It is costing companies like Walmart less to ship goods to the back door. And it is helping the retailers of the world because customers are coming through the front door with more money in their pockets. Americans, the terrible money savers we are, usually take any extra money we have burning a hole in our pocket and spend it.
Russ Koesterich, a global chief investment strategist at BlackRock, told the New York Times this week that, “middle-income families are spending what they would spend on gas on other parts of the economy.”
Guilty as charged.
This comes at a real opportune time for me. I live in Henderson so my commute is 66 miles door-to-door each way, five days a week. But I am paying nearly $9 less each time to fill up my car than I was when I first came here at the end of September. And with my new, more fuel-efficient car, I only fill up four times every two weeks instead of five or six. That is, by my rough bad math, a monthly savings of nearly $150!
The lower prices should also help the county’s bottom line, with lower gas purchase for the county fleet and increase sales tax revenue from disposable spending. Local businesses may get a boost from increased visits. I know I’m eating more chicken wings at Wings N’ Things.
Of course, these days of low gas prices will not last as long as we’d like, I fear.
Nevada and Arizona are discussing raising state gas taxes to fund the Interstate 11 project between Las Vegas and Phoenix. Federal lawmakers are talking about raising the national gas tax to pay for repairing roads and bridges, which is needed.
If those taxes get through we may end up paying more at the pump in the long run when fuel prices increase again.
Enjoy theses low gas price days while you can.