2016 gas prices expected to remain low

By Kalea Hall | January 5, 2016 at 12:01a.m.

YOUNGSTOWN

Less money spent at the pump means more money spent elsewhere.

AAA estimates drivers last year saved more than $115 billion on gas compared with 2014, and GasBuddy.com analysts estimated motorists saved more than $130 billion.

Both AAA and GasBuddy project prices could be even lower this year.

“I think [prices] will be slightly lower,” said Patrick DeHaan, senior petroleum analyst for GasBuddy. “2016 could be the cheapest year in close to a decade.”

In Ohio, the average price of gas in 2015 was $2.33, down from $3.34 in 2014, according to GasBuddy.

The national average was $2.40 in 2015 compared with $3.34 in 2014. At the start of the year, the national average was $1.99 a gallon, 20 cents lower than when 2015 began.

Ohio’s average at the start of 2015 and 2016 remained the same at $1.89.

The main factor affecting gas prices is the cost for a barrel of oil, which was $37.04 on Dec. 31, down $16.23 from a year earlier. Driven by global competitors increasing supply while there’s low demand, the price of oil has dropped more than 50 percent since mid-2014 when it was more than $100 a barrel.

The drop lowered gas prices, but also has cost the Mahoning Valley jobs at local companies that supply the oil and gas industry, such as Vallourec Star on Martin Luther King Jr. Boulevard.

Kurt Rankin, economist for PNC Bank, thinks oil prices will continue to fall from where they are now this year, but there’s “no chance that will have a net negative effect on the U.S. economy.”

AAA projects the average price of gas this year will be between $2.25 and $2.45 per gallon, which is lower or comparable to the 2015 average of $2.40 per gallon.

Regional prices will vary during the year. Refinery production could cause the prices to increase in certain regions. Some areas could see prices higher than $3 per gallon, while the national average is expected to remain below that cost.

The AAA report does highlight the potential for an increase in gas prices if there is a major change in the oil market and the supply and demand are rebalanced.

The cost of oil is something Mike Kassem, owner of the Morgan Oil gas station on Lowellville Road in Struthers, watches closely. Kassem also expects prices to stay low – within $2.35 to $2.50.

“Customers are happy, and the people who work for the oil industry are laid off,” Kassem said. “It is better for my business when the prices are low. I sold more gasoline, and inside sales were better because there’s more money to spend.”

With the lower prices at the pump, consumers tend to drive more and more vehicles are sold, said George Mokrzan, senior economist at Huntington Bank. Automakers are expected to post record-breaking sales today. Analysts expect sales of about 17.5 million, which would break the record of 17.35 million sales in 2000.

“I think the big question is, when do we see a bottom of the energy prices?” Mokrzan said. “There’s a lot of complicated factors under play.”