Archive for November 18th, 2008
October Gasoline Prices Lowest Since 2005
Tuesday, November 18th, 2008
The Bureau of Labor Statistics reported today wholesale energy and gasoline prices dropped dramatically in October – ultimately, a stark indication of decreasing demand resulting from the global economic downturn.
While wholesale energy prices fell 12.8 percent, wholesale gasoline prices dropped 24.9 percent after just a 0.5 percent decline last month.
So far in November, falling oil barrel prices and consumption have made current gasoline prices the lowest since summer 2005, according to the U.S. Department of Energy. The average retail price also dropped yesterday to $2.132 a gallon – a 2008 all-time low after prices peaked to $4.165 in July.
Meanwhile, executives and economic experts are still wondering how current prices will affect holiday retail sales, if at all. Kathy Lien of Global Forex Trading called the decline a “silver lining” for this season.
“Although gas station receipts will take a hit, lower prices at the pump will free up money for Americans to spend on basic necessities and holiday purchases,” the director of currency research wrote yesterday.
Eduardo Castro-Wright, head of Wal-Mart’s U.S. operations, has already reported such behavior this month, as made evident by company sales. As gasoline prices fell last month, traffic at its rural and urban stores increased, he said at a Morgan Stanley conference. Wal-Mart’s company sales have also risen 7.4 percent to $94 billion over the last quarter.
The International Council of Shopping Centers reported that nearly one of every four shoppers feel encouraged by lower gasoline prices to spend more – “albeit by only modest amounts.” Michael Niemira, chief economist and director of research, remains skeptical.
“Unfortunately, rising unemployment is holding back spending much more than the help that is coming from lower gasoline expenditures,” he said to the Wall Street Journal .
The U.S. Department of Energy’s information administration projected last week that regular gasoline prices will average at $2.37 a gallon. The average price of an oil barrel can also fall by more than half of its July 2008 price, to about $63.50.
Tags: Bureau of Labor Statistics, christina lee, gas prices, holiday sales, producer price index
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