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.
Sports in Brief: TC's Johnson picked up by Twins
The Minnesota Twins purchased the contract of Traverse City Beach Bums All-Star closer D.J. Johnson, signing him to a two-year deal. The Twins will be the third affiliated organization for Johnson. (Plus more)Continued ...
New website is a trail-blazer
A new interactive website will provide outdoor enthusiasts a one-stop user’s guide to 5,300 miles of trails across Michigan's northern lower peninsula.Continued ...
MacMaster won't have mother's vote
State Senate candidate Greg MacMaster gained endorsements from political officials in his opponent's hometown, including Traverse city's mayor, but primary foe Wayne Schmidt swiped a different sort of political prize: support from MacMaster's mother.Continued ...
UPDATE: Authorities continue to investigate homeless man's death
Traverse City police are awaiting toxicology reports to see if drugs or alcohol factored in a local homeless man's death.Continued ...
Three Republicans hope to represent Antrim County in Lansing
A teacher, a handyman and a semi-truck driver all want to be the Republican candidate for Michigan’s 105th House seat.Continued ...
Students present research findings at National Air and Space Museum
Three Traverse City West Senior High School students took a trip to the Smithsonian National Air and Space Museum in Washington, D.C., but it wasn't just to see the sights.Continued ...
NMC could lease Shadowland Motel
Northwestern Michigan College officials will discuss a plan to increase student housing by leasing a local motel.Continued ...
Sheriff's deputies warn of fraudulent law enforcement calls
Grand Traverse County sheriff's officials are asking residents to call authorities if they receive phone calls from someone stating they missed jury duty and must pay a fine or face arrest.Continued ...
Triebold, LaJoie still the team to beat in Au Sable race
Can anyone seriously challenge the defending champs? That’s the biggest question going into the 67th annual Au Sable River Canoe Marathon race Saturday evening.Continued ...
2014 All-Region Girls Track Team
The Traverse City Record-Eagle's picks for the 2014 All-Region Girls Track team:Continued ...
2014 All-Region Boys Track Team
The Traverse City Record-Eagle's picks for the 2014 All-Region Boys Track team:Continued ...
Embezzlement from Park Place Hotel suspected
Police are investigating an embezzlement complaint at the Park Place Hotel.Continued ...
Letters to the Editor: 07/26/2014
Are shoppers safer?; No info monopoly.Continued ...
Education Newsmakers: 07/26/2014
Jared Ornelas, of Lake Leelanau, was named to the Dean’s List at Lake Superior State University, Sault Ste. Marie, for spring semester 2014. (Plus more)Continued ...
New street magazine helps homeless
Randy Parcher has lived in a van with his girlfriend for three years. He helps support the couple by day selling his art work, which he creates at public spaces like the library or coffee house. He burrows down in a pile of blankets at night and relies on body heat to stay warm.Continued ...
Body & Soul in Brief: 07/26/2014
Arcadia Daze luncheon; Grief workshops; Church histories. (Plus more)Continued ...
Blood Drive Calendar: 07/26/2014
Area Blood Drives: American Red Cross - Gaylord, 10 a.m.-3:45 p.m., July 30, F.O.E. Eagles Club, 515 S. Wisconsin Ave. (Plus more)Continued ...
Homeless man identified
Traverse City police released the name of a local homeless man whose death is under investigation. Robert Lee Howard, Jr., 62, died Thursday in the emergency room at Munson Medical Center.Continued ...
Leelanau County meth lab discovered, investigation continues
A Cedar man and Suttons Bay woman were arrested for maintaining a drug house in Centerville Township, the first meth lab found in the county, Leelanau County Sheriff Michael Borkovich said.Continued ...
Authorities investigate overdose death
Traverse City police are investigating the death of a homeless man who investigators considered a witness in the recent beating death of another homeless man.Continued ...
E. coli levels back down
It's safe to swim again. Bacteria levels at four Grand Traverse Bay beaches are back down after they elevated briefly on Wednesday.Continued ...
Ag Forum: Rebuilding 'foodshed' and community resilience
In my previous life as a reporter for the Record-Eagle from 1986 to 1998, I remember reporting on two words that were new to me at the time.Continued ...
Community in Brief: 07/25/2014
Christmas in July; Artist’s reception; Solar viewing party. (Plus more)Continued ...
Bums fall in slugfest
With 21 runs scored on 28 hits, it was not an easy night for the 10 pitchers who took the mound for Thursday’s game between Traverse City and host Schaumburg.Continued ...
Sports in Brief: Registration taking place for football, soccer
Registration has begun for YMCA Flag Football and YMCA Coed youth soccer. (Plus more)Continued ...
- Sports in Brief: TC's Johnson picked up by Twins