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VOL. 8 | NO. 13 | Saturday, March 21, 2015

Less for the Tank, More for the Bank

With gas prices falling, drivers will have extra cash to play with this spring, summer

HOLLIE DEESE | The Ledger

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The U.S. Energy Information Administration predicts the typical American household will save nearly $750 on gasoline in 2015, but no one should expect the good fortune to last forever.

Yes, gas prices did fall below $2 – and have begun falling again in recent days after rising about 35 cents in February and early March – but now it’s spring, a time when gas prices typically rise.

“Gas prices are cyclical,” says Patrick DeHaan, senior petroleum analyst with gasbuddy.com.

“They go up in the spring, they hit a peak at some point in April and May. They start going down towards Memorial Day and into June. And if there are hurricanes, prices may go up in August.

“But if there are no hurricanes, prices generally, very gently, drop for a good portion of the summer and then, about mid-October, prices really drop because that is when demand goes down. And then the cycle repeats itself.”

A Murfreesboro family, Angie Hughes, Megan Kelley, Carol Ellis and Zoe Ellis, look at cars at the Beaman Toyota car lot for a friend.

(The Ledger/Michelle Morrow)

Tom Kloza, chief oil analyst at the Oil Price Information Service, tells the Associated Press he expects drivers in much of the nation, especially in the South, to be paying less than $2 a gallon at times this spring and summer.

DeHaan says Nashville’s prices peaked last year right around the third week of June at $3.53 and then slowly began dropping. By July 25 prices were down to $3.36, on September 11 prices hit $3.20.

Then, at the start of October, prices dropped dramatically.

“At the start of October it was about $3.15, and at the start of November about $2.75,” DeHaan explains.

“The start of December was down to about $2.55. At the New Year, it was about $2, and then we got down to $1.86 at the end of January. Now we are back up, and it will likely keep going up gently like the national average is.”

So will gas prices drop significantly?

“Compared to last year, prices this summer are still going to be 80 cents to a dollar lower than last summer,” DeHaan notes. “No, prices are not $1.80 like they were a few months ago. In the summer, it will probably be in the low to mid-$2 range, but that is a lot better than the $3 range from all last year.”

This winter’s ice and snow is expected to have no impact on pump prices.

“For there to be a major impact on gas prices you have to be talking about a weather event that is extreme enough that it causes a disruption to refineries,” he says.

“Most gas stations get their gas via pipeline underground, so it doesn’t matter what the weather conditions are above ground. Very rarely do you see extreme cold taking such a toll.”

Prices influence car sales

Lower prices at the pump have extended to more spending at the dealership. And while people are buying trucks and SUVs now, they could soon be trading them in for more fuel-efficient models. Either way, manufacturers and sales people are happy.

“So far, lower gas prices continue to be positive for vehicles in general, and aside from the growth in crossovers and trucks that we were already seeing in the second half of 2014, we aren’t seeing a major shift in our model mix,” says Paige Presley, corporate communications specialist with Nissan North America. “We continue to see good shopping activity on vehicles like Altima, Sentra and Versa.”

The Nissan Group set a February record with total U.S. sales of 118,436 units, up 2.7 percent year-over-year. Nissan Division was up 1.1 percent to 106,777, also a February record.

Those sales numbers can be seen on the local level for all manufacturers.

“I have been here with the company for 24 years, and it is probably the best year I have had [was] last year in terms of personal sales and income,” says Robbie Payne with Trickett Honda in Rivergate.

It’s more of the same in Mt. Juliet.

“People are buying bigger, less-fuel-efficient vehicles because gas is cheap, but as Americans we are very fickle,” says Jay Syling, new truck manager at Two Rivers Ford in Mt. Juliet. He has been selling cars for 17 years and says they had a record January and February until the storm hit.

“But two months from now when gas goes up to $3.50 a gallon they are going to be trading all of those in for fuel-efficient vehicles,” he says. “That is how the economy operates and that is what as Americans, we do. As a business it keeps the economy going. It generates a lot of sales tax.”

Despite the low gas prices tempting potential buyers now, manufacturers remain committed to alternative-fuel and electric options as well.

“Interest in electric vehicles remains strong,” says Presley. “We’re confident that EV sales will continue to rise over time with increasing emission regulations and other reasons for purchase of EVs such as lower operating costs, reducing dependence on foreign energy sources, environmental concerns and a great driving experience.”

For now, people are enjoying lower pump prices, however much they can get, and spending or saving the extra money.

“I think it will encourage more people to travel in 2015,” says Barry Young, executive director of the Sumner County Convention and Visitor’s Bureau.

“That is great news for Sumner County and for Middle Tennessee, as the Nashville region is already a hot spot for tourism. So those families that have been putting off their vacation because of expense might be able to take that trip while gas prices are this low.

“This could have a very positive economic impact on our area.”

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 124 481 17,865
MORTGAGES 127 530 20,565
FORECLOSURE NOTICES 4 48 2,693
BUILDING PERMITS 195 891 36,836
BANKRUPTCIES 52 262 11,426
BUSINESS LICENSES 24 139 5,848
UTILITY CONNECTIONS 26 116 6,830
MARRIAGE LICENSES 26 133 4,049