Archive for Friday, December 12, 2014

Gas prices fall more than 40 cents since November; Lawrence fuel prices lower than state average

December 12, 2014

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Mitch Reiber, Olathe, fills his car up with gas at the Zarco station at 1500 E. 23rd St. on Friday, Dec. 12. Reiber was filling up for a price of $2.34 for regular unleaded.

Mitch Reiber, Olathe, fills his car up with gas at the Zarco station at 1500 E. 23rd St. on Friday, Dec. 12. Reiber was filling up for a price of $2.34 for regular unleaded.

Kansas drivers have reason to be pumped this holiday season as average fuel prices have been steadily declining.

Since this time last month, the average gas price in the state has dropped about 42 cents to $2.42 per gallon for unleaded gas, according to AAA’s fuel gauge report for Friday. Since December 2013, the average unleaded gas price is down about 60 cents per gallon, the report said.

In Lawrence, that price is even lower, with the lowest price in town at just $2.31 per gallon at Woody’s Gas Express, 920 N. Second St., according to www.kansasgasprices.com. Many other Lawrence stations, like Kwik Shop, QuikTrip, Zarco and Presto, priced their fuel at $2.34 per gallon as of Friday afternoon.

Kansas University business professor George Bittlingmayer said the growing U.S. production of its own oil is a contributing factor in the fuel price decline. Bittlingmayer said oil and natural gas prices have been falling because of the ever-growing hydraulic fracturing, or "fracking," industry in the United States.

“Since the fracking revolution in the U.S., we are producing almost as much oil as Saudi Arabia,” Bittlingmayer said. “The U.S. is producing about as much oil as we are consuming.”

Lawrence driver Kelly Cobb said the decrease allows her to travel more than she would have in the past.

“My husband and I are going to see my sister in Salina this weekend,” Cobb said. “(The lower gas prices) really help with travel.”

Paying just $2.34 per gallon along with an additional fuel discount that comes with her Dillons card, Cobb spent about $11.15 for 6.7 gallons of gas in preparation for her upcoming trip.

“I can see the impact,” Cobb said. “It impacts my daily life.”

But Rahim Dhanani, also a Lawrence driver, said while the fuel decline is nice for him as a consumer, it doesn’t alter the frequency that he fills up his tank.

“It doesn’t really change anything,” Dhanani said. “Last week, I went to Texas. I was still going to go if it cost $30 or $50. People need fuel and they’re not going to stop buying it if the price goes up.”

Dhanini said that he predicted the price would continue to drop to about $2.25.

Whether that will happen is not yet known, Bittlingmayer said, but if the recent decline is any indicator, holiday travelers might just have a few extra dollars to put into gifts instead of into their gas tanks.

Comments

Clara Westphal 3 years, 4 months ago

When the price of groceries went up, the excuse given was that transportation costs were higher due to the high price of gas. Why hasn't the price of groceries gone down now that transportation costs are lower?

David Holroyd 3 years, 4 months ago

Let's see what happens in Lawrence when the students leave next week..only then will we know if local prices are manipulated.

Andy Anderson 3 years, 4 months ago

By Alasdair Macleod Posted 12 December 2014 Last week I wrote that contrary to the prevailing mood US dollar strength could reverse at any time. This week I look at another aspect of the dollar, which almost certainly will become a significant source of supply: a global shift out of it by foreign holders.

As well as multinational corporations that account in dollars, there are non-US entities that use dollars purely for trade. And so long as governments intervene in currency markets, governments end up with those trade dollars in their foreign reserves. Some of these governments are now pushing hard to replace the dollar, having seen its debasement, which is beyond their control. This has upset nations like China, and that is before we speculate about any geopolitical angle.

The consequence of China's currency management has been a massive accumulation of dollars which China cannot easily sell. All she can do is stop accumulating them and not reinvest the proceeds from maturing Treasuries, and this has broadly been her policy for at least the last year. So this problem has been in the works for some time and doubtless contributed to China's determination to reduce her dependency on the dollar. Furthermore, it is why thirteen months ago George Osborne was summoned (that is the only word for it) to Beijing to discuss a move to urgently develop offshore renminbi capital markets, utilising the historic links between Hong Kong and London. Since then, it is reported that last month over 22% of China's external trade was settled in its own currency.

Given the short time involved, it is clear that there is a major change happening in cross-border trade hardly noticed by financial commentators. But this is not all: sanctions against Russia have turned her urgently against the dollar as well, and together with China these two nations dominate and carry with them the bulk of Asia, representing nearly four billion rapidly industrialising souls. To this we should add the Middle East, most of whose oil is now exported to China, India and South-East Asia, making the petro-dollar potentially redundant as well.

In a dollar-centric currency system, China is restricted in what she can do, because with nearly $4 trillion in total foreign exchange reserves she cannot sell enough dollars to make a difference without driving the renminbi substantially higher. In the past she has reduced her dollar balances by selling them for other currencies, such as the euro, but she cannot rely on the other major central banks to neutralise the market effect of her dollar sales on her behalf. Partly for this reason China now intends to redeploy her reserves into international investment to develop her export markets for capital goods, as well as into major infrastructure projects, such as the $40bn Silk Road scheme.

Andy Anderson 3 years, 4 months ago

This simply amounts to dispersing China's dollars into diverse hands to conceal their disposal. Meanwhile currency markets have charged off in the opposite direction, with the dollar's strength undermining commodity prices, > most noticeably oil >, very much to China's benefit. And while the talking-heads are debating the effect on Russia and America's shale, they are oblivious to the potential tsunami of dollars just waiting for the opportunity to return to the good old US of A.

Dorothy Hoyt-Reed 3 years, 4 months ago

So that's what we get from conservatives now. If gas prices are high, it's all Obama's fault. Nice simple, concise explanation with no discussion of futures trading, supply and demand, or oil company greed. When the prices drop there are long explanations of why it dropped, and, while no one has come to this forum yet, about how low gas prices are bad for the economy, and they will be forced to raise gas taxes to help pay for roads, and the poor, destitute oil companies will have to lay off all their workers, and, worse, the investors might not get a dividend, gasp. But nothing about it being Obama's fault. Well, the rest of us peons are enjoying a little more money in our wallets, so yadda, yadda.

Clark Coan 3 years, 4 months ago

Why are gas prices always a lot cheaper in Kansas City? For example, Regular is only $2.17 at a BP station in Shawnee. Maybe there's a little informal price-fixing going on here in town?

I don't believe we are producing enough oil for our domestic needs despite what is said. It would be foolish to allow exports of oil at this point as some want.

Marc Wilborn 3 years, 4 months ago

One aspect of energy prices is that banks are not a major force in their trading and price manipulation. Good for us, maybe. Much of the improvement in the US economy can be traced back to the enrgy boom due to fracking and its related services. A slowing US energy sector will slow that portion of the economy while other parts of the economy will benefit due to lower energy prices. No one knows what the long term effects will be when a major part of your economy begins to slow quickly.

The other big problem with lower energy prices is the effects it may have on the fixed income space, namely the junk bond portion of the bond market. Many of the small to middle size frackers used high interest debt to fuel their growth and they need to continue to drill to stay up with their costs. Fracked wells are not long-lived wells, usually so they must continue to drill to get ahead. If this slows quickly then they will begin to miss debt repayments mid-year next year which could have some sombering effects on the overall bond market.

No one knows how this will end up - better due to low energy prices or bad due to a further slowing economy and slower job growth. The federal government will surely take advantage of the low prices to increase the gas tax to help re-fund the highway fund.

Andy Anderson 3 years, 4 months ago

@ Wilborn.

From Jim Rogers: Oil, which is the largest and most important commodity for everybody, is down. The Saudis are dumping oil because America told them to. America's having negotiations with Iran and a situation with Russia so they're trying to put pressure on both of them. The Saudis are very happy to go along with it and cooperate because the Saudis are trying to do something about the frackers in the United States. If they can put some of them out of business or even cause problems in that industry it will certainly slow the fracking in the US. It is a fairly high-cost way to get oil and gas, and that will slow the huge new supplies of oil coming on-stream. So the Saudis have an economic reason to do it and a political reason given the US is sort of their masters who tell them what to do and how to live life. From the Saudis' point of view it's understandable that they would do it and they are doing it. I don't know how long it's going to go on. And by the way, I certainly did not anticipate that this would happen because it's not based on economics, it's based on politics, and I didn't see it coming. That's what's going on with oil. - See more at: http://www.thedailybell.com/exclusive-interviews/35910/Anthony-Wile-Jim-Rogers-Choose-Farming-for-Your-Family-and-Finances/#sthash.x0Y79ff0.dpuf

Laura Wilson 3 years, 4 months ago

The list of local stations at $2.34 as of Friday afternoon isn't quite accurate. While the Kwik Shop at 19th St. was at that price, the one at Wakarusa was $2.39 when I got gas there late Friday afternoon. Still a wonderful price considering what it was a year ago, but why the differences between two shops owned (I assume) by the same people/company?

Clark Coan 3 years, 4 months ago

I remember when it was down to $1.34 in Jan. 2009 during the Great Recession.

Mike Ford 3 years, 4 months ago

We went to OKC on Tuesday and Wednesday of last week. We rented a Fiat 500 locally. We went down US 169 south and US 75 north back. We went down towards Ada from OKC and straight north to Bristow and back to Tulsa and this area. We used $53 in gas and on the tank down we got 42 mpg going from Lawrence to south OKC on one tank (366 miles). There are isolated towns along the Kansas Oklahoma border where gas jumps considerably in price but we saw $2.28 in Bartlesville at Kwik Trip and we saw $2.09 at a gigantic truck stop on East Reno St. near the OKC Thunder stadium east of Bricktown. There are so many different gas retailers in OKC that there is a 20 to 30 cent swing at times in price but that also has to do with alcohol free gas and 10% ethanol gas. Oklahoma has a profound dislike for ethanol gas due to their petroleum production base. Gas in KC is cheaper on the Missouri side because the bad road State of Missouri has one of he lowest road taxes in the US and their roads show it.

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