The average price of a gallon of regular octane gasoline in Maine is lower than it’s been for about five years and fell further in the week before the Christmas holiday.
Prices are down about 90 cents from a year ago to an average of about $2.58 per gallon statewide and $2.51 per gallon in the Bangor area, according to GasBuddy.com and AAA surveys.
The decline in prices is rare in a market where production cutbacks from the 12-member Organization of the Petroleum Exporting Countries typically keep prices from falling too far.
Heating oil was also down to a $2.93 statewide average as the world’s major oil producers continue to fire on all cylinders and drive down global crude oil prices.
With no clear end in sight to the glut of crude, drivers’ savings at the pump are already affecting some consumer trends. Thomson Reuters and the University of Michigan this month recorded their highest consumer sentiment index in eight years, up to 93.8 from 88.8 in November, which they attributed to improved job prospects and falling gas prices.
Further, savings for shippers and airlines eventually could result in lower prices of everyday goods.
At the pump, consumer habits are the same. Tim Dysart, vice president at vehicle and residential fuel dealer Dysart’s, said he doesn’t expect the price drop to affect consumer spending habits and noted that the drop comes during the state’s slowest driving season.
Still, commuters and travelers who have changed nothing of their own habits are seeing savings while driving the same vehicles in the same way they did six months ago.
For Maine commuters, the scope of that benefit has some measurable dimensions. About 78 percent of the state’s 633,153 workers over the age of 16 drive alone to work, according to the latest census figures, and have an average commute of about 23.3 minutes (the survey doesn’t track those figures in distance). About 30 percent of commuters travel 30 minutes or more.
Don’t let short-term savings fuel long-term delusion. Dysart said prices will go back up in the long term. Exactly when? That’s the $1 million question.
But the drop in fuel prices is the clearest explanation observers of car sales have for an uptick in sport utility vehicle purchases through November.
The Guardian reported four of the top five selling vehicles in November were pickup trucks or SUVs, with sales figures showing a 9.6 percent increase in demand as total passenger vehicle sales rose 1.3 percent for the month.
Los Angeles Times columnist David Lazarus wrote earlier this month that hybrid and electric car sales dropped by double digits for the same month, echoing University of Maine energy economist Jonathan Rubin’s view that the trend reflects the short-sightedness of consumers at large.
It’s another way of saying the only surefire way to win when it comes to any fuel is to use less.
Will it trickle down? Depends on the hand at the spigot. While diesel prices are higher, they and jet fuel prices have also come down with the global drop in crude oil prices.
At shipping companies, that could lead to lower prices that ultimately translate to savings on the shelf. Those savings by shipping companies could get passed along to business customers and, in turn, be reflected in the prices customers pay, but that clearly depends on many variables.
A spokesman for the National Federation of Independent Businesses told USA Today the drop in shipping costs — such as a lower fuel surcharge from shipper UPS — is “a big deal” for small and midsize businesses that could go back into the company.
At those levels of fuel consumption, buyers usually lock in fuel prices months or further in advance, which means that drops in prices for customers have some lag time.
For airlines, that lag time can be several months. Even then, The New York Times reported many airlines remain full at their current ticket prices and therefore have little incentive to drop ticket prices with the lower fuel costs.