Americans traveling this Christmas will pay for some of the cheapest gasoline in six years as a continuing oil glut keeps fuel prices down.
The national average for a gallon of regular gasoline was below $2 on Monday, and in Arkansas pump prices averaged below $1.80 a gallon.
Consumers are benefiting from a volatile oil market that has cut the cost of crude in half over the past year. An oversupply of crude coupled with weak demand has pushed down oil prices this year, making gasoline cheaper.
Oil prices remained below $40 a barrel Monday and are expected to stay low into 2016, as there is still an overabundance of crude on the market.
The average price of gasoline in Arkansas on Monday was $1.79 a gallon, compared with $2.27 a year ago. Nationwide, gasoline averaged $1.99 a gallon, down from $2.41 in 2014, according to AAA's Daily Fuel Gauge.
Among the lowest-price places in Arkansas was Springdale, where a gallon of gasoline could be had for $1.53 on Monday. And in Little Rock gasoline could be found for $1.63 a gallon, according to gasbuddy.com, a price-tracking website.
The decline in pump prices is saving Americans about $118 billion this year, said Tom Kloza, chief oil analyst for gasbuddy.com.
Kloza said gasoline prices are high in comparison to crude prices because some traders expected greater demand this December after a strong driving season, but he expects prices to drop even more.
"If you look at it relative to crude, gasoline prices have been ... significantly higher than one would expect with very weak prices," he said.
Gasoline prices still have between 5 cents and 20 cents to fall before a seasonal lift in the spring, he said, adding that even with the price increase in the spring, gasoline will still be cheaper than it has been in previous years. Prices typically fall in the winter -- a weaker period for demand -- and increase in the spring.
"We're looking at a very weak January, which is absolutely typical," Kloza said. "And we're looking at a spring rally, which is absolutely typical."
For consumers, the decline in oil prices has resulted in hundreds of dollars in savings from gasoline for their households. But so far they have been hesitant to spend their savings.
"People are not spending those dollars on things other than gasoline in ways we would expect them," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville.
"Consumers are just enjoying their savings and getting into a slightly better financial situation."
Retail sales should have gotten a boost when energy costs, particularly gasoline prices, began to drop, said economists and analysts.
But not even the Christmas shopping season has been enough to spur consumer spending. Instead consumers, who are concerned about the economy and stagnant wages, are more likely saving or using their extra money to pay down debt, they said.
"I do believe there is a general feeling that the economy is not as strong," said Rob Lutts, president and chief investment officer for Cabot Wealth Management. "And that is causing consumers to be a bit more cautious."
Business on 12/22/2015