Those low gas prices on station signs aren’t going away soon, the government says. In a dramatic shift from previous forecasts, the Energy Department is predicting that the average price of gasoline in the U.S. will be $2.94 a gallon in 2015. That is a 44-cent drop from an outlook issued just a month ago.
If the sharply lower estimate holds true, U.S. consumers will save $61 billion on gas compared with this year. Rising oil production, particularly in the U.S., and weak spots in the global economy have led to a sharp reduction in oil prices over the past four months. Not seeing much of a change ahead, the government cut its forecast for global oil prices next year by $18 a barrel to $83.
As a result, U.S. drivers will pay on average 45 cents less for a gallon of gas next year compared to this year. Based on expected gasoline consumption, that’s a savings of $60.9 billion. That may not seem like a lot in the context of a $17.5 trillion U.S. economy, but economists say it matters because it immediately gives consumers more money to spend on other things. Consumer spending accounts for 70% of the U.S. economy.
After falling for 49 straight days, the average gasoline price in the U.S. today is $2.92, the lowest since December of 2010, according to AAA. That was also the last full year when the average came in below $3 a gallon. In Baton Rouge, the average today is $2.71 per gallon of regular, unleaded gas. That’s down from just over $3 a gallon one month ago, and $2.96 a year ago.
The global price of crude has fallen by $35 a barrel, or 30%, since late June and closed at $80.38 Wednesday. Read the full story.
