Arkansans To Get Early Holiday Gift With Even Cheaper Gas, Heating Bills

As crude oil prices fall into bear market territory, industry analysts are forecasting that pump prices in Arkansas and the rest of the U.S. may remain relatively low this winter and could drop another 5 to 15 cents per gallon before Thanksgiving Day as gas stations catch up with the steep declines in the wholesale market.

The lower gas prices could also prompt consumers to take the lock off their pocketbooks just in time for the holiday shopping season, Wall Street analysts say. In a recent research note to investors, Morgan Stanley’s senior U.S. economist Ellen Zentner estimated that lower retail gasoline prices added about 0.2 percentage points to annualized growth in real consumer spending.

“That chill in the air reminds us that the holiday shopping season is near and, compared with one year ago, households have more spending potential,” Zentner wrote in the Wall Street investment firm’s November bulletin. “On balance, we find that households have roughly $129 billion in additional real discretionary income going into the fourth quarter — a 4.3% gain compared with the same period last year—that has been driven primarily by gains in aggregate wages and salaries.”

Zentner added, “Moreover, nominal income will be boosted by as much as an additional $40 billion year over should lower gas prices continue.”

And as consumers open their wallets, AAA officials are hoping that more affordable gas prices may also induce more travelers to take a winter vacation or trip to grandma’s this holiday season.

“It is too early to say whether more people will travel for the holidays, but lower gas prices should give consumers more money to spend on dining, shopping and lodging during their trips,” the AAA said in its monthly gas price report.

ARKANSAS PUMP PRICES 16 CENTS CHEAPER THAN NATIONAL AVERAGE
Nationwide, the U.S. average price for regular gasoline fell 10 cents to $2.95 per gallon as of November 5, 2014, 31 cents lower than a year ago, according to the U.S. Energy Information Administration. This week’s price is the first U.S. average price below the $3.00-per-gallon mark since December 20, 2010.

AAA officials said national pump prices usually drop during the autumn season due to decreasing demand and the cost savings associated with producing winter-blend gasoline. However global oil prices have declined more than anticipated, as supply has outpaced demand, contributing to even greater savings at the pump for drivers.

“Barring an unexpected market-moving development this winter, motorists can expect to pay retail prices that are relatively low, and could see the price continue to tick downward even a little further as gasoline stations adjust to falling oil prices in the global market,” the AAA said.

Currently, Arkansas has the eighth lowest pump prices in the nation when compared to all 50 states, averaging $2.80 per gallon for regular unleaded, according to AAA’s daily fuel gauge. That price is 15 cents below today’s national average.

Pump prices in the state’s metropolitan areas range from a low of $2.74 per gallon at the Texarkana state line to a dime higher in the Fort Smith area. Motorists in the Fayetteville-Springdale-Rogers area and the Little Rock-North Little Rock and Pine Bluff markets are all paying an average of about $2.80 a gallon to fill up their tanks.

Drivers choosing to fill up their tanks with a higher-grade of gasoline should expect to pay an average premium of $3.19 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $3.48 a gallon, down a penny from only a week ago.

WINTER HEATING FUEL PRICES CHEAPER ACROSS THE BOARD
Meanwhile, not only will Arkansas and U.S. consumers get a reprieve from high prices at the pump this winter, costs for residential heating fuels are also declining in all categories, EIA data shows.

After the unusually cold winter of 2013-14, U.S. households can expect lower heating expenditures this winter compared with last winter, the EIA said in its recent short-term energy and winter fuels outlook. On average, household expenditures for homes heating primarily with natural gas will total $649 this winter, a $31 decline from last winter’s average.

Homes heating primarily with electric heat are expected to spend $938, or $17 less. Homes using heating oil or propane, a staple fuel in Arkansas’ rural areas, have higher expenditures on average ($1,724 and $1,992, respectively) than homes using natural gas and electricity, but still lower ($652 less and $362 less, respectively) compared to last year.

Also, the latest forecast from the National Oceanic and Atmospheric Administration (NOAA) said temperatures are expected to be warmer than last winter. The extreme weather patterns last winter elevated demand for all heating fuels led to a drawdown of U.S. energy supplies, putting upward pressure on heating prices. Because weather patterns present great uncertainty to winter energy forecasts, EIA’s projections include a “10% colder and 10% warmer scenario.”

The EIA’s forecast and pressure on this winter’s natural gas prices is likely to be downward compared to last winter, the Natural Gas Supply Association (NGSA) said in its recent annual winter outlook report.

“When NGSA weighed all the different pressure points, the picture that emerged for the upcoming winter is one of remarkable growth in supply and steady underlying growth in demand that will be moderated by the forecast for a warmer winter than last year’s,” said NSGA Chairman Greg Vesey. “The abundant supply of natural gas is great news for consumers. When all key supply and demand factors are combined, we anticipate downward pressure on prices compared to last winter.”

As of Oct. 20, residential heating oil prices averaged $3.48 per gallon, almost 5 cents per gallon lower than last week, and 38 cents less than last year’s price of $3.86. Wholesale heating oil prices averaged nearly $2.65 per gallon, 2 cents per gallon lower than last week and nearly 46 cents lower when compared to the same time last year.

Residential propane prices decreased by less than one cent last week to $2.37 per gallon, half a cent less than the price at the same time last year. Wholesale propane prices averaged nearly $1.08 per gallon, 4 cents lower than last week’s price and 20 cents per gallon lower than a year earlier.

Still, natural gas prices have rallied from last week’s 52-week low. At the end of Wednesday’s session, natural gas spot prices were up 46 cents from a week ago to $4.20 per million British Thermal units (MMBTU) at Oklahoma’s Henry Hub. That is also nearly 73 cents higher than a year ago.

The EIA is expected to release its monthly short-term energy outlook next week. The updated forecast from the U.S. Energy Department is expected to reflect the dramatic decline in domestic and internal crude oil prices, and its effect on retail and wholesale gasoline prices in the near term and through 2015.