Consumers are getting a gift this year not typically found under a Christmas tree: budget-friendly energy prices.
Propane prices that spiked last year are softening and the cost of gasoline has dropped to a level not seen since 2010, giving consumers' wallets a break, analysts said.
"Retailers are salivating right now looking at the gasoline prices declining just before the holidays," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville. Lower fuel prices mean consumers "have room for something other then gasoline."
Oil prices have fallen more than $40 per barrel since June as result of abundant supply from the nation's shale oil boom, according to a report by AAA. The price of oil dropped another 10 percent last week after the Organization of Petroleum Exporting Countries said last week it would not cut its supply in order to lift prices.
The oil glut has led directly to a drop in gasoline prices.
"We're still on a downward path," said Tom Kloza, chief oil analyst for gasbuddy.com,a price-tracking website. Gasoline prices could average $2.68 nationwide by Monday, Kloza said.
The average price of regular grade gasoline at the pump in Arkansas was $2.54 per gallon Friday, compared to $2.82 a month ago. The national average was $2.71 per gallon, down from $2.96 a month ago, according AAA's Daily Fuel Gauge Report.
"We are seeing a little lift in driving now," Kloza said. "People certainly have more disposable income."
Residents who use propane to heat their homes saw propane prices surge last winter as the frigid temperatures tightened supplies that were already constrained following a plentiful corn harvest, infrastructure changes and an increase in propane exports. Propane is used to heat homes and water, dry grain crops and power generators.
"It was kind of a perfect storm of events that set us up to be in a very reactionary position in terms of getting propane to end users," said Jennifer Van Dinter, manager of energy analysis at Bentek Energy, an arm of Platts.
"We're definitely in a better shape now," she said.
At just less than 80 million barrels, propane supplies are above last year's stores and the five-year average, Van Dinter said Friday.
With more propane in stock and low demand, prices have been falling with crude oil, said Peter Fasullo, principal at EnVantage Inc.
"They've really plummeted over the last several weeks," he said. "We're not going to see the same situation we saw last year."
Residential propane prices averaged $2.41 per gallon Dec. 1, down 16 cents from last year, the Energy Information Administration said.
Wholesale propane prices in the Midwest this week averaged about 65 cents per gallon, compared to $1.21 a year ago, Fasullo said.
Prices will be dependent on the weather for the rest of the winter, Fasullo said.
While the price of other fuels have fallen, the market price for natural gas remains volatile and the winter rate set for Arkansas residents in October is higher than last year's rate.
Bills for CenterPoint Energy's 420,000 customers will rise almost 3.5 percent and Arkansas Oklahoma Gas customers in Arkansas -- about 45,000 -- will see a 17 percent increase. The 155,000 SourceGas customers in Arkansas will see their bills jump 24 percent.
The spot prices for natural gas, which soared when supplies were depleted last year, have been swinging back and forth in response to weather forecasts, analysts said.
"They've been fluctuating partly because of the cold weather we've had in the Midwest and North East and that made people concern that we have a tight market," said Michael Lynch, president of Strategic Energy and Economic Research Inc. "Now it looks like that is a less of a threat."
On Friday the price of natural gas for January delivery rose 15.3 cents on the New York Mercantile Exchange to settle at $3.802 per million British thermal units.
"If you look at natural gas, it's been a very volatile ride," said Phil Flynn, an energy analyst with Price Futures Group in Chicago.
But, he said, "If you are a consumer it's the best of times."
Business on 12/06/2014