Originally published November 17 2014
By the gallon, milk is now more expensive than gasoline in America
by J. D. Heyes
(NaturalNews) For years, Americans have been getting fleeced at the gas pump -- with regular fuel at prices surpassing $3 a gallon and, for brief periods of time since 2008, more than $4 a gallon.
Whether or not you're a fan of fossil fuels, the fact of the matter is that the industrialized world still runs on it in its many forms -- coal, oil, gasoline, diesel fuel, fuel oil, propane, natural gas, etc. What's more, this commodity is used to deliver goods and services to practically everyone on the planet, so when it is priced high, the goods and services being carried by various fuel-burning vehicles, ships, airplanes and trains must also rise to compensate companies for their fuel costs.
But in recent months, thanks in part to a huge shale oil boom in the United States, the price of oil has been steadily decreasing, to the point now where, in most places around the country, gasoline is priced below $3 a gallon. That hasn't happened in nearly two years, according to price analyst website GasBuddy.com.
"It's stunning what's happening here," Tom Kloza, chief oil analyst at the Oil Price Information Service, told The Associated Press (AP). "I'm a little bit shocked."
Higher production, lower demand - lower prices
At the end of October, the average price of gasoline fell 33 cents to around $3 a gallon; a few days later, the average national price dipped below $3 a gallon to around $2.99. Now, according to GasBuddy.com, the average price, as of this writing, is $2.92; a year ago, the average price hovered around $3.21. Just a month ago, the average price was near $3.25 a gallon.
As global demand shrinks and as oil exploration and drilling technology has managed to affordably make accessible millions of acres of new sources in the U.S., and as crude continues to flow out of the volatile Middle East, prices have fallen. Now, in fact, the price of a gallon of gas is cheaper than the price of a gallon of milk, which, in September, averaged $3.73 a gallon.
Analysts believe that a couple of factors will probably send gasoline prices above $3 a gallon again soon: production declines, greater seasonal demand and more driving. But, the AP reports, America is on pace for the lowest national average since 2010. Moreover, next year's national average is forecast to be even lower. The AP noted an example of the impact that prices are having on average consumers:
Trisha Pena of Hermitage, Tennessee, recently paid $2.57 a gallon to fill up her Honda CRV. Like many around the country these days, she was so surprised and delighted by the price she took a photo and posted it on social media for her friends to see. "I can't remember the last time it cost under $30 to put 10 or 11 gallons in my tank," she said in an interview. "A month ago it was in the $3.50 range, and that's where it had been for a very long time."
The AP further reported on "a few things to know" about lower gasoline prices:
-- Crude prices are falling: Oil prices have declined from $107 a barrel this summer to near $81 a barrel now, as supplies increase on weaker demand. Since 2008 (remember the summer of $4.50-a-gallon gas?) U.S. oil production has risen 70 percent, making America the world's second-leading daily producer after Saudi Arabia. More oil from Iraq and Canada is also boosting global supplies.
-- The formula is no longer: In the past, a stronger economy in the U.S. -- the world's largest oil consumer -- would mean increased demand and higher prices. But that is no longer the case. More-efficient vehicles coupled with changing driving habits has destroyed the old formula.
-- More money at home: The decline in the average price per gallon of gasoline from $3.51 a year ago is saving the typical American household about $50 a month -- a small fortune to families that struggle to make every penny count.
-- Bottled water: Besides a gallon of milk, gas prices are now much, much lower than some bottled water. A case of a dozen 1.5 liter bottles of Evian on Amazon.com costs $38.99, or about $8.20 a gallon, AP reported.
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