NEW YORK (AP) — At least gasoline should cost you less in 2013.
Hamburger, health care and taxes are all set to take a bigger bite out of the family budget this year. But drivers' annual gas bills are expected to drop for the first time in four years.
Forecasters say ample oil supplies and weak U.S. demand will keep a lid on prices. The lows will be lower and the highs won't be so high compared with a year ago. The average price of a gallon of gasoline will fall 5 percent to $3.44, according to the Energy Department.
"Everything is lining up to lead to softer prices this year," said Tom Kloza, chief oil analyst at the Oil Price Information Service.
That would still be the third-highest average price ever. But a discount of 19 cents per gallon from 2012 would save the typical household $205 this year and free up $25 billion that could go instead to restaurants, malls or movie theaters — the kind of consumer spending that accounts for 70 percent of American economic activity.
"It's a little benefit to the economy, and it's a little more reason the Fed doesn't have to worry about inflation," said James Hamilton, an economist at the University of California at San Diego who studies energy prices.
Forecasters caution that they can't predict other factors like Middle East tensions, refinery problems or hurricanes along the U.S. Gulf Coast — in other words, the same events that caused gasoline prices to spike in 2011 and 2012. Any or all of those troubles could crop up again in 2013 and push pump prices above last year's record average of $3.63 a gallon.
The government expected gas to average about $3 during 2011. Then came the Arab Spring, which included the shutdown of Libya's oil production. Oil prices shot up, and gasoline averaged $3.53 for the year. The government's forecast for last year also turned out to be too low, by 18 cents per gallon.
And, Hamilton said, consumer spending might not see a boost from lower gasoline prices because most Americans will be paying higher taxes. The expiration of last year's payroll tax reduction will cost an extra $579 for households making $40,000 to $50,000 in 2013, according to the Tax Policy Center, a non-partisan Washington research group.
But after average gas prices rose in 2010, 2011, and 2012, a little relief will be welcome in 2013.
Gas prices set records each of the past two years for a few reasons. Global demand has risen as the developing economies of Asia, Latin America and the Middle East burn more gasoline, diesel and jet fuel. At the same time, unrest in the Middle East has sparked fears of widespread supply disruptions in a region that produces a quarter of the world's oil. That makes traders willing to pay higher prices up front for oil as a way to protect against possible dramatic price spikes in the future.
In the U.S. last year, several refineries and pipelines had problems that reduced gasoline supplies, especially on the West Coast and in the Midwest, helping to push pump prices even higher.
This year, global oil demand is expected to rise slightly again, but increased production, especially in the U.S., should keep supplies ample. The U.S. Energy Information Administration said this week that American production will grow next year by 900,000 barrels per day, the nation's biggest single-year increase ever. By 2014, U.S. production will reach its highest level since 1988.
At the same time, U.S. gasoline consumption is back down to 2002 levels because of more fuel-efficient cars and the tepid economy. It isn't expected to rise this year or next, according to the Energy Department.
That means the U.S. will need to import less oil, which will increase global supplies and help tamp down prices somewhat.
The current average retail price of gasoline is $3.31 per gallon, 6 cents lower than last year, according to AAA, OPIS and Wright Express. AAA predicts gas won't surpass $3.80 a gallon this year.
The peak last year was $3.94, reached in April. The auto club also says average pump prices could drop as low as $3.20, a level that the country hasn't seen since February 2011.
Tom Kloza of OPIS expects price differences between regions of the country will remain large, and local prices could be volatile as supplies build and dwindle. In Utah, drivers are paying $2.88 per gallon on average, while in New York drivers are paying $3.75. Just in the last four months, gasoline supplies on the West Coast fell to their lowest level in a generation, then rose to where they are now, their highest level in a generation.
AAA forecasts the national average will peak between $3.60 and $3.80 in the spring, then drop to between $3.20 and $3.40 by mid-summer. It will rise again during the hurricane season along the Gulf Coast, the nation's oil-refining hub, before moving lower toward the end of the year.
It's that up-and-down movement that will dictate drivers' moods. Drivers tend to remember what they paid for their last fill-up — not that they may have paid a little less a year ago, Hamilton said.
"People have a short reference point," he said.
Average price of a gallon of fuel will fall to $3.44
NEW YORK (AP) — At least gasoline should cost you less in 2013.
High School Sports Scoreboard: 03/07/2014
A roundup of scores from today's boys district basketball tournament games:Continued ...
Benzonia woman accused of prescription fraud
A Benzonia woman faces a felony charge after authorities said she fraudulently obtained hundreds of prescription pills.Continued ...
Panthers roar in regional final
Tim Reznich is hoping Frankfort can have a reunion with Nicole Marshall. And history says the Panthers may very well do that.Continued ...
Dispatch: Smart911 worth the price
An online service that gives Grand Traverse County 911 responders potentially vital information about callers cost taxpayers almost $19 per call in its first half-year of operation.Continued ...
TC native joins Team Blake on TV's 'The Voice'
Ryan Whyte Maloney finally can spill the beans: he’s a bona fide contestant on “The Voice.”Continued ...
Editorial: Beach testing grant exposes state's lack of commitment
The issue: GT Band to fund beach testing program for 2014. Our view: Grant points up state's failure to act.Continued ...
Passengers wrongly told TC airport was ‘closed’
Len Price and his family just wanted to get home. The Traverse City resident, 72, his wife, Linda, and son Logan were headed home from a Montana skiing vacation March 1 when weather caused long delays to their United Airlines flight.Continued ...
Pastor sues former church over contract
A controversial pastor’s public schism with his former church moved into the legal realm.Continued ...
OTP revives 'Sound of Music' after 20 years
Kathy Verstraete unearthed some familiar artifacts while she packed her mother’s home two years ago.Continued ...
Letters to the Editor: 03/07/2014
Where was Snyder?; Time to fight back.Continued ...
Building Permits: 03/07/2014
Building permits issued in Grand Traverse County:Continued ...
Frankfort coach elected president of coach association
A pair of girls basketball victories and a regional championship weren’t the only things Tim Reznich won this week.Continued ...
McBain captures Class C regional title
McBain rebounded from a poor shooting performance in the first half to overtake Beaverton and secure a 61-44 decision Thursday in a Class C girls regional championship game.Continued ...
And the Oscar (contest) goes to ...
Holly MacAulay did her homework and it showed when she her Oscar contest entry landed among four with perfect scores.Continued ...
The Record: 03/07/2014
Assumed names issued in Grand Traverse County:Continued ...
Downtown boat ramp hits bump
A plan to redesign a Boardman River boat launch in Traverse City is temporarily grounded because some local environmentalists weren’t consulted about changes.Continued ...
Back to school — for parents
Traverse City area parents will have a chance to go back to kindergarten at Grand Traverse Academy on March 13.Continued ...
Former TC student teacher returns as singer-songwriter
Josh Rose found musical inspiration in some unusual places growing up on a sheep farm in Michigan’s Upper Peninsula.Continued ...
Weekend in Brief: 03/07/2014
"Pure A Cappella" showcase; Mel Larimer concert series continues; and more.Continued ...
NMC's Birmley Road observatory open to public tonight
Two realms of science fascinate all types of people, regardless of age, said Jerry Dobek, a science and math instructor at Northwestern Michigan College.Continued ...
Night Life Calendar: 03/07/2014
What's going on after dark:Continued ...
Sports in Brief: 03/07/2014
Coach Mike Krzyzewski is out of the hospital and at practice with No. 4 Duke after feeling light-headed during a loss at Wake Forest. (Plus more)Continued ...
Movie Capsules: 03/07/2014
New this week — 300: Rise of an Empire — Greek general Themistokles leads the charge against invading Persian forces led by mortal-turned-god Xerxes and Artemisia, vengeful commander of the Persian navy.Continued ...
Community in Brief: 03/07/2014
Mexican Dinner Party benefit; Titan Student Choreographed Dance Concert; Grand Traverse Humanists meet; A Matter of Honor (AMOH) event; and more.Continued ...
- Poll: Does state set aside enough money to test beaches?
- High School Sports Scoreboard: 03/07/2014