2-Jan-10 6:00 AM  CST  

Stable Prices at the pump lull motorists 

A deep recession, home foreclosures, job losses, swine flu — among the many things Americans had to fret about in 2009, the price of gasoline ranked pretty low.

After topping $4 a gallon in 2008, U.S. gasoline prices failed to crack even the $3 mark last year, the first time in four years that hasn't happened.

Held in check by lower oil prices and a sputtering economy, the national average price for gasoline — after starting the year at $1.62 — rose to $2.69 a gallon in October but never went higher, according to AAA statistics.

In Houston, prices were even lower. The daily average bottomed at $1.43 in January and peaked at $2.53 in June.

But U.S. drivers may not be so lucky in 2010.

Prices start the new year at one of the highest points they've ever been for January, and they typically rise in the spring and summer as warmer weather spurs more driving. In addition, signs the economy is on the rebound boosted crude oil prices at the end of 2009, lifting pump prices along with them, and that trend is likely to continue.

That's why many experts say U.S. gasoline prices will likely return to $3 territory by this summer and generally be higher this year.

“I do think an improving economy is going to give us higher prices in 2010,” said Peter Beutel, industry analyst with Cameron Hanover in New Canaan, Conn., who predicts pump prices could rise by 50 cents or more from current levels by this summer.

On New Year's Day, the average retail gasoline price nationwide was $2.65 a gallon, up a penny from Thursday, up 6 cents from a week ago and about a dollar higher than on Jan. 1, 2009. In Houston, the average price was $2.46, up a penny from Thursday, up 7 cents from last week and about a dollar higher than a year earlier, according to AAA's Daily Fuel Gauge Report.

The U.S. Energy Information Administration predicted in December that rising crude prices will push U.S. gasoline prices toward $3 per gallon during this year's summer driving season.

That could be bad news for U.S. consumers still struggling to get back on their feet after the worst recession in decades. But a big jump at the pump is not a given this year.

The economic rebound could go slower than expected, keeping fuel demand slack. Oil refiners, which have recently been closing plants and cutting output, also could decide to ramp up production again, resulting in surpluses. Yet seasonal factors alone should be enough to push prices higher than they are today.

“There hasn't been one year where gasoline wasn't cheaper in the winter than it was in the summer,” said Jason Toews, co-founder of gasbuddy.com, a Web site based in Minnesota that helps consumers find low-cost gas stations in their areas.

Prices plateau

In 2009, gasoline prices started in January at their lowest level since 2003. But pump prices began to rise in the spring and summer of 2009, then remained roughly stable through the end of the year, even as oil prices topped $80 a barrel.

Lower pump prices in 2009 marked a break from a pattern of escalating prices in recent years.

Average U.S. gasoline prices broke $3 a gallon for the first time in August 2005, after Hurricane Katrina hobbled Gulf Coast oil refineries, and had exceeded the mark every year since. Regular hit a record $4.11 a gallon in July 2008 amid a historic run-up in crude oil prices to nearly $150 a barrel.

Crude oil accounts for roughly half the cost of gasoline, so changes in oil prices affect prices at the pump. In trading Thursday, crude for February delivery added 8 cents to $79.36 a barrel.

Price spikes at the pump in recent years have desensitized U.S. drivers, making it seem like current prices are a bargain, though they are still high by historic standards, Toews said.

“Nobody is scared by $2.60 a gallon anymore,” he said, noting pump prices only surpassed $2 a gallon for the first time in 2004.

A hint of less gasoline use

There is, however, some evidence that rising pump prices this fall may have caused some Americans to dial back their gasoline usage.

U.S. highway travel fell in October by 0.5 percent from a year earlier, the first decline in five months, the U.S. Transportation Department said last month. Energy Department data also shows motor fuel consumption was down slightly in October from a year ago.

Dan Ronan, spokesman for AAA Texas, said weaker gasoline demand last year could reflect not only a recessionary pullback in driving, but more permanent changes in driving patterns and a broader shift to more fuel-efficient vehicles.

Look around, he said. “You don't see many cars on the road anymore that get 12 or 14 miles to the gallon.”

brett.clanton@chron.com

 

For additional information on this Industry news article, please contact:

Bret Clanton

Source: Houston Chronicle
http://www.chron.com

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