Gas prices break $3 level
BY DALE HOGG
dhogg@gbtribune.com
The national price for a gallon of gas averaged $3.25 per gallon on Monday, the American Automobile Association reported. This is the lowest price of 2012.
Entering the weekend, the lowest price this year had been $3.28 on Jan. 1; however, beginning on Saturday, the national average has reached a new 2012 low on three consecutive days.
This may be the national average, but there are many places where gasoline is below $3 per gallon, including Great Bend and many area communities, said Jim Hanni, executive vice president for public and government affairs at AAA. Prices have tumbled as many as 10 cents in one week.
Statewide in Kansas, the lowest prices reported were $2.89 at Pittsburg, according to gasbuddy.com. The highest was $3.29 at Eureka.
Part of this, he said, is the refineries switching from summer gas blends to winter blends, which are less expensive to produce. In addition, there is less demand and inventories are up. Crude oil prices are also lower.
With 90 percent of all travel done by car, these prices are helping to fuel an increase in holiday trip taking, Hanni said. There has been between a 1.6 and 2 percent jump in the number of folks traveling.
But, if past history is any guide for the future, gasoline prices are close to bottoming out for the time being, said Patrick DeHaan, petroleum analyst for gasbuddy.com. Gasoline prices have historically risen between Christmas and mid-January, with an average rise of 10 cents per gallon over the last five years.
Last year, gasoline prices on Christmas were $3.24, before rising to $3.35 slightly more than two weeks later. The year before last, prices rose from $2.59 on Christmas to $2.74 during the same time frame.
While most years saw gasoline prices rise following Christmas, not all years saw increases. One has to go back to 06/07 to see the only drop between Christmas and Jan. 15 of the following year. Back in 2006, prices were $2.33 on Christmas before falling to $2.21 on Jan. 15, 2007.
“Perhaps the next logical question would be why prices have a tendency to rise going into the New Year?” DeHaan said. “I surmise it is because of year-end inventory movements made by oil refineries.”
The amount of supply contained in storage facilities historically begins to draw down in the last couple weeks of the year as refineries hunker down and make movements for tax purposes. “This also helps their bottom line as the above data shows, with gasoline prices rising between Christmas and the following January 15th six out of the last seven years.”
DeHann said he believes there may be a slight break versus 2012. “That doesn’t mean we won’t set new all time record highs in some areas, but my growing belief is that the yearly average we set in 2012 won’t be set anew in 2013, and that would be welcome relief.”
According to the American Automobile Association, Midwesterners will be on the move this holiday season in numbers higher than last year.
During the 11-day Christmas-New Year holiday, which runs Dec. 22 through Jan. 1, AAA estimates there will be 7.8 million central states residents traveling 50 miles or more. That is nearly a 2 percent increase over a year ago.
“Consumers are ready to celebrate the holidays and ring in the New Year with fun trips to visit family and friends,” said Jim Hanni, executive vice president for public and government affairs at AAA. “It is during this time of year consumers get to take time off from work and school and enjoy a relaxing vacation.”
Hanni said this is the least volatile of travel holidays. “People won’t let economic issues stand in way of getting home or kicking off the New Year.”
The numbers, which include Kansas, Missouri, Nebraska, North and South Dakota and Iowa, account for 37.5 percent of the region’s population.
“People in the Midwest do seem to travel more,” Hanni said. Nationally, 93.3 million Americans, or about a third of the population, will make similar trips.
The national forecast is a 1.6 percent increase in holiday travel. The growth in the region is stronger.
Why? “Our economy is in better shape than in other parts of the country,” Hanni said. Unemployment, housing and other economic indicators look better in the heart of the nation.
Lower gas prices, many at levels not seen since last December, also help. This is important since nationally, 90 percent of the travel is done by motor vehicle.
Hanni said, where as air fare rates are 3 percent lower this year, a larger percentage of those in the Midwest opt to take a car than in the nation as a whole.
As for air travel, it is up 4.5 percent nationally and up 4.8 percent in the region.
The one dark spot is car rental rates. They rose 41 percent.
The average round-trip distance for Christmas trips is 760 miles for all of America and those taking the treks will spend an average of over $700. The regional distance is 727 miles and the trips cost about $656.
That spending breaks down as follows:
• 36 percent for fuel and other transportation
• 18 percent for food and beverage
• 17 percent for shopping
• 15 percent for accommodations (hotel rates are between 2 and 3 percent lower)
• 11 percent for entertainment
