Wednesday, July 15, 2015
By Kalea Hall
YOUNGSTOWN
Pat Butto of Boardman expects to pay more for her gas since she has to fill up her Buick Enclave, a sport utility vehicle.
This time last year, Butto would have spent $20 to $30 more to fill up.
On Tuesday, she stopped at Gateway Gas Mart on Market Street in Youngstown to fill her tank for just under $50 at $2.54 per gallon.
“It’s extra money for me to spend,” she said. “I am not willing to give up this car. I love it for what I do, and I need the size.”
In the Youngstown-Warren region, the average price for a gallon of regular gas is down about 85 cents from last year with Tuesday’s average of $2.65, according to AAA.
Ohio’s average price Tuesday was $2.75 compared with $3.47 a year ago.
The national average was $2.77 Tuesday compared with $3.61 a year ago.
Savings at the pump means more money in consumers’ pockets to spend, save or use to pay off debt.
That’s the bright side of the drop of about 50 percent in oil prices from last year.
On Tuesday, oil was at $52.20 a barrel – down $48.63 from last year, according to U.S. Energy Information Administration.
That price could continue to drop if the U.S. and other world powers’ nuclear deal with Iran gets past Congress’s review.
In trading Tuesday, benchmark U.S. crude oil prices were volatile, falling quickly then rising. Iran is an OPEC member, but its oil production has been affected for years by sanctions over its nuclear program. Any easing of the sanctions could see Iran selling more oil, which could bring down crude prices.
“The minute those sanctions come off, that will affect oil prices,” said Patrick DeHaan, Gasbuddy.com senior petroleum analyst.
Last week, the Mahoning Valley once again saw the darker side of lower oil prices when Vallourec Star, a Youngstown pipe manufacturing plant that supplies the oil and gas industry, announced a workforce reduction of about 60 to 80 jobs effective in August.
“I don’t want to pay more for gas, but I don’t want people to lose their jobs,” Butto said.
Sales at the Vallourec Star plant on Martin Luther King Jr. Boulevard are significantly below last year’s. Leaders at the plant already had shut down for three weeks this year and offered voluntary layoffs and early retirement to handle the slowdown before deciding to make a workforce reduction.
“There are areas that are much worse that are much more energy intense,” said George Mokrzan, director of economics for Huntington Bank.
The drop in oil that led to the drop in gas prices started last year when foreign producers, such as Saudi Arabia and other OPEC members, decided to cut the price to gain back the market they may have lost to U.S. oil producers. Foreign producers can still turn a profit at the lower barrel prices while U.S. producers take a hit and have to adjust operations.
The price of oil is not expected to increase until next year.
“I do see some stabilization at least this year and next year for increases,” Mokrzan said.
DeHaan expects prices at the pump to stay under $3, but above $2.20 for the rest of the summer in Ohio – where prices are constantly fluctuating because of the competitive nature of the state’s market.
“Stations are completely at war with each other,” DeHaan said.
Gas prices are expected to fall again after the summer.
Mike Kassem’s customers at Morgan Oil on Lowellville Road in Struthers are happy.
“When the prices are cheaper, people have more money to put into the economy,” Kassem said.
The U.S. Energy Information Administration’s study released Tuesday shows this year’s summer gas prices are the lowest they have been in years.
The average price for gas this year is expected to be $2.67 per gallon, the lowest price since 2009.
Gas consumption is expected to increase by 194,000 barrels per day for a 2.1 percent increase from last summer, according to the EIA.
Driving this summer is expected to increase by 2.2 percent over last summer, which makes for the largest year-over-year summer increase in 11 years.
Mokrzan believes consumers are watching to see how permanent this drop is, and may consider to save or pay off debt before they spend.
Maxine Savel of New Springfield stopped by Morgan Oil on Tuesday to fill her Cadillac SRX’s tank at $2.49 a gallon. She has noticed a savings because she has been able to spend more.
“It gives me more money for golf clothes,” she said.
Another Morgan Oil customer, Jeff Landers of Poland, stopped to fill up his Jeep Grand Cherokee on Tuesday. Landers uses Gasbuddy’s app to find the cheapest prices in the area.
“If we have extra money in our pockets, it is going to help somewhere else,” Landers said. “You want to boost the economy? Lower gas prices. All of us would have more money to spend.”
Contributor: Associated Press