As gasoline prices sink ever lower, you can’t blame people for asking: Will we see $1 gas again in Kansas City?
The expert answer: Probably not, but go ahead and dream. There’s a glut of winter-blend gasoline depressing prices right now, and it could take a couple of weeks for it to start fading.
“We have a station in Oklahoma City at $1.08, and one in Michigan at $1.06,” Patrick DeHaan, senior petroleum analyst at GasBuddy.com, said Wednesday. “So we’re very close to that tipping point where someone in the Midwest could see $1 gas.”
By Wednesday afternoon, someone did — but not directly related to the supply situation.
GasBuddy, which posts prices from all over the country, had a report of 99.9-cent gas from Nusser Oil in Jetmore, Kan., west of Wichita. The station confirmed the price, “at least for today,” but said it was a short-term special to reward customers and mark a shift in ownership to a younger generation of the Nusser family.
Whether gas prices in the Kansas City area fall lower, they are definitely helping household budgets. The QuikTrip on Southwest Boulevard was selling unleaded gas Wednesday at $1.39 and was staying busy throughout the day, often drawing customers from just over the Kansas state line where prices are higher.
“I do a lot of driving and so does my son,” said Julie Brainard of Prairie Village. “We’re probably saving $75 a month.”
David Kasmiskie estimated during his fill-up that he’s saving $20 with each stop compared with a few months ago.
“It gets spent, just everyday living, going out to dinner, bars,” the Overland Park resident said.
Economists say Kasmiskie is right. American families are saving much of their pump windfalls, but where they are spending it is showing up at dinnertime and in driveways.
“They’re going out to eat a little bit more,” Chris Christopher Jr. of IHS Global Insight said Wednesday.
And, he said, auto sales are shifting back toward light trucks and away from better-mileage passenger cars.
Although the recent price drop has some speculating about dollar gas, real memories of it are anything but fresh. The last time Kansas City, Mo., averaged $1 or less at the pump was Jan. 30, 2002, when gas was 99.5 cents, said Mike Right, spokesman for AAA Missouri.
Kay Barnes was in her first term as mayor at the time, and Mike Sweeney and Carlos Beltran were among the Royals about to head to spring training.
Right says it’s “very unlikely” Kansas City will average $1 again. “Crude oil is around $27-28 a barrel, and it would have to drop another $10 to bring gasoline down to $1.”
DeHaan agreed that “the odds are rather low” for sporadic $1 gas here, much less for the average to fall that low. And prices tend to dip in January and start heading up in late February.
“If we don’t see $1 gas soon, all bets are off,” DeHaan said.
Area prices — averaging $1.33 in Missouri and $1.45 on the Kansas side — are the lowest since the late 2008 price plunge during the Great Recession.
The current reasons are familiar by now: Worldwide demand is flat, and the U.S. oil boom has nearly doubled domestic production and reshaped global supplies.
OPEC, the international cartel of oil-producing nations, has shown no interest in trimming its production as its members prefer to fight each other over market share.
As a result, crude oil prices are down more than 70 percent in the past 20 months, sending gasoline prices lower, too.
On Tuesday, wholesale gasoline could be had for 70 cents a gallon from Tulsa, Okla., the supply hub for this region, said Jim Mosby of Admo Energy, which helps retailers buy their gasoline.
But the price rises well past $1 at the pump when federal and Missouri taxes, about 36 cents, are added, along with about 6 cents to cover getting the gasoline to a station, and whatever profit the station makes. And Kansas’ higher gas taxes generally make pump prices a few cents higher there.
That wholesale price is due to rise as supplies tighten when refineries go idle to switch over to making summer gasoline blends.
Still, the federal Energy Information Agency expects the average pump price for all of 2016 to be below last year’s. And no big rebound in oil prices is anywhere in sight.
Putting a dollar figure on consumer savings is tough, but one estimate puts it at an extra $710 last year for an average household. That’s only $13.65 a week, with other estimates showing weekly savings of $14 or as little at $12.50.
Over time, it can add up, and some gas shoppers are hoping it does.
Jordan Lopez’s savings at the gas pump has the Kansas City resident planning a vacation someplace sunny, like Costa Rica.
“I was easily spending $80 to $100 a week. Now, it only costs me $15 to fill up. And that was being empty,” Lopez said Wednesday.
Tiffany Burris figures she’s spending $40 less with each fill up, which means an extra $150 a month to her Platte City household budget. And none of it is getting spent just yet.
“We are putting it toward our kids’ college,” Burris said.
There are some pains, however, with lower prices.
In the energy sector, the prolonged dive in crude prices has led to the loss of an estimated 250,000 U.S. jobs. Up to 150 oil and gas companies could file for bankruptcy if prices stay this low, says energy research firm IHS. That eventually could be a boon for surviving companies, but even Big Oil names such as ExxonMobil, BP and Royal Dutch Shell are cutting back right now.
North Dakota, the center of the U.S. boom, has seen oil towns empty out, and other energy-dependent states such as Alaska and Texas are pinched, too.
The price slump also has been disastrous for the Kansas oil industry, small by national standards but important in many rural counties, said Kenneth White, vice chairman of the Kansas Independent Oil & Gas Association.
“In western Kansas, where we’ve had 100 rigs drilling, we now have six,” said White, who heads White Exploration out of Wichita. And recently when his company “called service companies to help us with some work, two of them were out of business.”
Nick Powell, the association’s chairman, heads Colt Energy, which is based in Mission and mainly operates in southeast Kansas. He said the oil price slump “has gone on far longer than we anticipated — much longer than the ’99 downturn,” and he had to lay off 20 percent of his staff, the same as many production companies.
The companies that service rigs are worse off, he said, with layoffs of 50 to 70 percent of staffs typical. And across Kansas, he said, production is down 20 percent.
Such cuts in production, especially in big producing states, eventually should stabilize oil markets. Then crude prices will rise. But when, and by how much, is always the question.
Until then, American consumers have something of a green light to put those gas pump savings into circulation. For one, pocketbooks are getting help from other places as more jobs have been getting filled, and both wages and the number of hours have improved.
Also, the pain in the oil patch comes from too much oil sloshing around the world, not because weaker economic growth is cutting into the demand for energy, said IHS chief economist Nariman Behravesh.
“This is not a signal about a global recession,” he said. “There’s a lot of chitchat about that. We just don’t see it.”
For now, Mosby and Right both said, motorists should enjoy the low prices at the pump.
They could dip further but are more likely to start rising soon. At Admo, Mosby said, the only sure thing about energy markets is “you never know.”