MOTORISTS SAVING A BILLION DOLLARS A DAY ON FUEL PURCHASES

[LAW]

As the New Year begins, consumers witnessed a spike in crude oil prices and a slight up-tick in retail pump prices across the nation and the region. This morning the national average for regular unleaded is $1.66 a gallon. That’s a vast improvement over the price situation six months ago when the price of gasoline and diesel soared to all-time record highs on the same day. The cost of gasoline hit $4.11 a gallon and the price of diesel zoomed to $4.85 a gallon on July 17. As of Friday, the average price of gasoline has dropped nearly $2.50 a gallon since then.

 

 

For motorists, that translates into a billion-dollar-a-day drop in pump prices since mid-July. That means we are now only spending $611.5 million per day on fuel purchases, compared to a staggering price tag of $1.613 billion a day back in mid-July.

 

 

However, when it comes to the prices of gasoline and diesel fuel, 2008 will go down in the annals of history as the most expensive ever. The yearly average price for gasoline in 2008 was $3.25 a gallon. That’s 46 cents higher than the yearly average for 2007, which was the previous record year. For diesel, the yearly average was $3.91 per gallon. That’s an increase of about 95 cents a gallon from the record 2007 number. *

 

 

How long will cheaper fuel prices remain the status quo? As the Obama era dawns, there are renewed calls for increasing the federal fuel tax. Last year, for the first time in its history, the federal highway trust fund teetered on the brink of insolvency. Only a last-minute emergency appropriation of $8 billion saved it from defaulting on its obligations. As of October 1, 2008, the average fuel tax imposed on gas in the United States was 48.4 cents per gallon. It’s 53.6 cents per gallon for diesel fuel. The White House and Congress have long resisted increasing fuel taxes, last raised in 1994.

 

Motor Gasoline Taxes (includes federal tax of 18.4 cpg)

 

Pennsylvania: 50.7 cents

 

Maryland: 41.9 cents

 

Delaware: 41.4 cents

 

District of Columbia: 38.4 cents

 

Virginia: 38.4cents

 

New Jersey: 32.6 cents

 

 

The Weekend

 

As the week ended, nervous oil traders were still keeping a watchful eye on international events, including the ongoing tensions in the Middle East and Russia’s threat to cut natural gas supplies to the Ukraine. As a result, the price of crude oil rebounded during trading on Friday. It closed at $46.34 a barrel, after spiking $5.57 Wednesday on the New York Mercantile Exchange. Markets were closed Thursday.

 

 

The Week Ahead

 

Motorists returning from their jaunts over the long New Year’s holiday weekend will find prices $1.44 cheaper than they were at this time last year. “The New Year begins on a positive note for motorists, who are paying nearly one billion dollars less for gasoline then they were in mid-July when the price of fuel hit its high-water mark,” said John B. Townsend II, Manager of Public and Government Affairs, AAA Mid-Atlantic. “The average retail price could still move lower in coming days and weeks, possibly as low as $1.50 a gallon between now and the end of February.”