Friday, September 4, 2015

Lowest Labor Day gas prices in 11 years both good and bad


Not only was the gas price spike a dead cat bounce, but gas prices during Labor Day weekend are the lowest they've been in 11 years.  Wochit News reports on the resulting windfall for U.S. consumers in Labor Day Gas Price Bonus: $1.4 Billion.

Labor Day is historically one of America's busiest driving holidays, but this year it's likely to be remembered for being one of the cheapest.

With gas prices continuing to move lower, the national average for a gallon of gas this Labor Day is expected to fall to $2.44, marking the lowest price at the pump since 2004.

By the time the last charcoals have cooled on the barbecue, Americans will have saved a collective $1.4 billion compared with last year.

That in turn could result in more consumer spending on eating out at restaurants and other extras.
If so, that would be good news, exactly the kind that would offset decreases in spending from the recent stock market correction.

Follow over the jump for more good and bad news caused by this year's lower oil prices from Wayne State University and the University of Michigan.

First, Wayne State University reports both the good and bad news caused by lower energy prices in S.E. Michigan Purchasing Managers Index remains steady despite global market concerns.
The Southeast Michigan Purchasing Managers Index (PMI) remained relatively stable from July to August, falling just under a point from 57.5 to 56.6.

While some respondents expressed concern over volatility in global markets – China, in particular – the PMI continues to indicate a fairly strong and stable economy for Southeast Michigan. A PMI value above 50 generally suggests economic growth. The 3-month average has remained above 60 since April. It currently stands at 61.1.

According to Timothy Butler, an associate professor of global supply chain management at Wayne State University’s School of Business, who interpreted this month’s results, the slight month-to-month decrease was due mostly to summertime drops in production and new orders, with some commodity prices also falling.

“It won’t come as a surprise to anyone who’s been to the gas pump recently that prices on petroleum and propane are decreasing,” Butler said. “Carbon plate pricing was also down this month.”
That's the bad news.  Lower commodity prices actually hurt some but not many companies here in S.E. Michigan.  Now the good news.
According to Kenneth Doherty, assistant vice president of procurement and strategic sourcing at WSU and an Institute for Supply Management board member, it is noteworthy that the employment index remains high, increasing to 59.1 with a 3-month average of 66.0.

“Employment numbers continue to be strong,” Doherty said. “It will be interesting to see if and when global issues impact the local job market.”

Survey participants appear to be cautiously optimistic about the business environment moving forward. More than 83 percent believe the economy will be either more stable or about the same over the next six months, while 16.7 percent believe the environment will be less stable.
It seems like the lower energy prices are offsetting the insecurity in the financial markets.

Now for some bad news, at least if one is concerned about conserving energy, as the University of Michigan reports Vehicle fuel economy falls slightly in August.
Gas mileage of new vehicles sold in the U.S. dipped last month, according to researchers at the University of Michigan Transportation Research Institute.

Average fuel economy (window-sticker values) of cars, light trucks, vans and SUVs purchased in August was 25.3 mpg, down 0.1 mpg from July.

"This decline likely reflects the decreased price of gasoline in August and the consequent increased sales of light trucks and SUVs," said Michael Sivak, a research professor at UMTRI.

Overall, fuel economy is down 0.5 mpg from the peak reached in August 2014, but up 5.2 mpg from October 2007—the first full month of monitoring by Sivak and colleague Brandon Schoettle.
It's not my fault, as I traded in my old car for a Prius.  I like spending a nickel per mile.

There is a silver lining to this cloud.
In addition to average fuel economy, Sivak and Schoettle issued a monthly update of their national Eco-Driving Index, which estimates the average monthly emissions generated by an individual U.S. driver. The EDI takes into account both the fuel used per distance driven and the amount of driving—the latter relying on data that are published with a two-month lag.

During June, the EDI remained at 0.82 (the lower the value, the better) for the second straight month. The index currently shows emissions of greenhouse gases per driver of newly purchased vehicles are down 18 percent, overall, since October 2007. EDI reached its best level (0.78) in August 2014.
Good.  Low gas prices aren't inducing Americans to pump even more greenhouse gases into the atmosphere as they drive.  I can take some comfort from that.

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