DOWN, DOWN DOWN! The price of petrol in the US just keeps on falling - let's hope the SA government sees the light and follows suit to release cash for consumer spending. Image: AP / David Goldman
NEW YORK - The average price of petrol here will be below $3/US gallon through 2015, the government has predicted. If the sharply lower estimate holds true US vehicle owners will together save $61-billion on their fuel bill over 2013.
The US Energy Department's monthly report reduced its forecast for 2015's global oil prices by $18/barrel to $83. Weakness in the global economy, it said, would squeeze demand for oil while production in places such as the US keeps rising.
The result: Fuel will cost $2.94/US gallon (3.785 litres, or R8.70/litre) on average in 2015, 45 US cents (about R5) less than during 2014. Based on expected petrol consumption, that's a saving of $60.9-billion.
STRETCHING A DOLLAR
That may not seem like a lot in the context of a $17.5-trillion US 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 US economy.
Tim Quinlan, an economist at Wells Fargo, explained: "It would be a reversal of the trend over the last few years where consumers can't stretch a dollar far enough. The price of petrol was one of the three big drivers of consumer confidence, along with stock prices and unemployment.
"Lately all three are moving in the right direction," he added.
The average petrol price in the US has fallen for 48 consecutive days and is at its cheapest since December 2010, according to the American Automobile Association. That was also the last full year when the average came in below $3/US gallon.
OIL PRICE DOWN $35
Drivers are now paying $2.92/ gallon, on average, the AAA says. Late (northern) autumn is often when the price of fuel hits its low for the year. The government is now saying that these prices aren't just a low point, but instead will be the norm in 2015.
The global price of crude has fallen by $35 a barrel, or 30 percent, since late June and closed at $80.38 Wednesday (Nov 12 2014).