Consumer Alert: Prices plunge at the pump. Here’s how it could affect your grocery bill.
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ROCHESTER, N.Y. Our consumer alert is all about good news on the gas front.
Pump prices are plunging. And while that’s great news for now, the question is whether it will it last. That’s exactly what I asked a nationally known petroleum expert on Monday. And he thinks while we may see prices creep up toward the end of the year, we won’t likely see $5 gas anytime soon. But he reminds us that extraordinary economic conditions could send gas prices upward again.
In Rochester, the average price on Monday was $3.63, down $1.35 from our high of $4.98 in June. And you know who we largely have to thank for the price plunge at the pump? China.
China imports more oil than any other country on the planet. And until recently, China was under strict lockdown as COVID cases surged to 40,000 a day in early December. So as the economy of the largest gas importer in the world ground to almost a halt, oil and gas consumption dropped.
Less global demand is playing a big role in the price drop at the pump. And GasBuddy expert Patrick de Haan says we can also thank oil and gas companies here at home.
“In addition, in the U.S. we’ve seen some improvements with refineries boosting production,” said De Haan. “After the conclusion of their fall maintenance, refineries using over 95 percent of their capacity, which is unseasonably high, meaning that refineries are essentially working overtime to produce as much gasoline and diesel as the market is consuming.”
So in addition to refineries opening the spigots here are home, at its last meeting OPEC decided to keep production at current levels. Most analysts expected them to close the spigots to drive up the cost of oil, but they didn’t do it. So everything you learned in your high school economics class is at play. Supply is up; demand is down, and that’s good for you and me.
Nationally, the price of gas has fallen by $1.75. But while we get our dander up when the price of gas spikes, the price we should be really concerned about is diesel. It is the fuel that powers the economy because most of our goods are transported using diesel fuel.
Those big rigs on the road that get your meat and potatoes to grocers all run on diesel. And those trains that carry everything from cars to steel to appliances to food all run primarily on diesel.
Here in New York, the price of diesel climbed to $6.54 last spring. And that drove up the price of goods. But there’s good news on that front as well.
“Diesel prices are starting to decline more than gasoline,” said De Haan. “That means on a cent per gallon basis the price of gasoline nationally last week fell 14 cents whereas diesel prices fell 15 cents. That’s going to be the trend going forward is that diesel is going to decline more over the next few weeks. That’s thanks to a big jump in the diesel supply as refiners have increased production.”
Diesel prices have played a big part in the price we’ve been paying at the grocery store because transporting food is more expensive. But we’ve seen diesel prices falling slowly. On Monday in New York, the average price of diesel was $5.60. That’s down 94 cents from a high of $6.54 this spring.