Gasoline prices are continuing to tumble as Christmas draws near, giving shoppers a little extra cash.
Drivers nationwide are paying less than $2.50 at the pump for the first time since 2009, and in at least 25 states -- including Arkansas -- some gas stations are offering fuel for less than $2 a gallon.
"From the driver's viewpoint, it's going to be the best of times," said Phil Flynn, an energy analyst with Price Futures Group in Chicago. "Obviously, this is going to help the economy in the short term."
The national average price at the pump for regular-grade gasoline was $2.45 a gallon Friday, which is down from $2.86 a month ago. The average price in Arkansas was $2.31 a gallon, down from $2.70 a month ago, according to AAA's Daily Fuel Gauge.
Gasoline prices are cheapest in the Fayetteville-Springdale-Rogers metro area, where the average was $2.07 a gallon on Friday. Some filling stations were charging less than $2 per gallon. The state's highest average gasoline prices were in Pine Bluff, at $2.45 a gallon, and in the Little Rock-North Little Rock metro area, where the average price was $2.41, according to AAA.
Gasoline prices are falling in tandem with oil prices that have dropped more than 45 percent since summer and continue to weaken because of a global oil glut.
Crude prices were already on a down slope before the the Organization of the Petroleum Exporting Countries decided last month not to reduce the suggested production levels of its members. Analysts say the dramatic drop in crude prices is now threatening to slow oil exploration in U.S. oil shale formations.
The price of West Texas Intermediate crude rebounded slightly Friday to finish at $56.52 a barrel on the New York Mercantile Exchange. Brent contracts rose $2.11 to $61.38 a barrel on the ICE Futures Europe exchange in London. Brent crude is the benchmark for many East Coast refineries.
Energy analysts don't agree on where oil prices will bottom. Some suggest between $50 and $60 a barrel, while others say crude could drop as low as $44 a barrel. That could mean an even bigger drop in retail gasoline prices in the coming weeks.
"I think they are going to go down a little further," said Tom Kloza, chief oil analyst for gasbuddy.com, who said he thinks prices will hit their lowest point soon. "I think the pace, which has quickened, is likely to slow."
But all analysts agree that so far the drop in oil prices is benefiting U.S. consumers who are enjoying more money in their wallets because they're paying less at the pump.
The drop in fuel costs will be comparable to a $100 billion to $125 billion tax cut for U.S consumers and will lift a measure of national economic growth by half a percentage point next year, according to a report by a Goldman Sachs analyst.
Analysts say the savings on fuel will bump consumer spending, from which retailers and restaurants stand to benefit.
The U.S. Energy Information Administration also said this week that it projects American households will save about $550 on fuel purchases next year as gasoline prices fall to their lowest point in 11 years.
"As the price goes down the comparison between now and some prior time is going to improve and ultimately result in more income to the family budget," said Mike Right, a spokesman for AAA.
A Section on 12/20/2014