U.S. Families To Save $550 on Gas in 2015, Government Report Says| Edmunds

U.S. Families To Save $550 on Gas in 2015, Government Report Says

WASHINGTON — The average American household is expected to save $550 in gasoline expenditures in 2015 compared to this year, according to a new report from the U.S. Energy Information Administration.

This savings is expected to affect consumer spending, including in showrooms, as trucks and SUVs become more popular choices. Little surprise then, that the 2015 Detroit Auto Show will be heavy with truck debuts, including the 2016 Nissan Titan, 2016 Toyota Tacoma and the next-generation Ford F-150 SVT Raptor.

The primary federal source of statistical information related to energy, the EIA forecasts that gas costs for an average family should total $1,962 next year. If that prediction holds up, it would be the first time in more than a decade that annual household fuel expenditures have dropped below $2,000.

According to the EIA, gasoline demand in the U.S. tends to be very "price inelastic," especially over short time periods, meaning the price of fuel has little impact on the number of gallons we use. So with gas costs decreasing, families will have more of their income available to spend on other goods and services, pay down debt or increase savings.

The EIA notes that the price of regular gasoline has now dropped for 11 straight weeks, and the agency says to expect that trend to continue in 2015, primarily due to the falling price of crude oil, which accounts for two-thirds of the price of a gallon of gas. If the forecast is accurate, we'll see crude oil priced at an average of $68 per barrel in 2015, with the cost dropping up to $5 per barrel lower than that early in the year.

The reason for the decrease in the price of crude, according to AAA, is low global oil demand relative to an abundant supply. Many of the oil-producing regions have ramped up production in order to increase exports to Asia and sustain market share in that region, which has caused the overall surge in the worldwide supply.

As a result, says AAA, we're experiencing the lowest pump prices in more than five years.

One fly in the ointment could be that continued low gas prices might negatively affect U.S. oil production, which tends to be more costly than that of the global sources.

Another factor is that some countries that are heavily dependent on oil exports to maintain their budgets, like Venezuela and Nigeria, could experience some political instability, which may also affect the price of crude oil.

Edmunds says: The dramatic drop in gas prices should shake up the shopping lists of consumers considering a new car or truck.

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