Low Gas Prices Predicted For 2015 And Beyond
ROBERT SIEGEL, HOST:
We're going to hear two very different views now of the steep drop in oil prices. Prices have fallen so much that drivers in a few states are finding gasoline this Christmas for under $2 a gallon. Average prices for a gallon of regular have dropped by more than a third since last summer. In a moment, we'll hear how this is pushing Venezuela to the brink of financial crisis. But first, NPR's Jeff Brady reports that in this country it means people are taking to the road more.
JEFF BRADY, BYLINE: Here in Philadelphia I didn't have to go far to find an example of someone driving more. Recently, I got a haircut at a rock 'n' roll-themed barbershop.
FRAN DOYLE: My name is Fran Doyle. I'm the manager of Floyd's 99 Barbershop in Willow Grove. I'm also a stylist, and I also do Jeff's hair.
BRADY: Just a haircut, nothing fancy. Anyway, Fran says he commutes about 45 minutes a day by car, and he's loving the lower gas prices. He was paying about $55 to fill up. Now it's closer to $35. And instead of staying home this Christmas...
DOYLE: ...I also chose last-minute to take a trip to Florida. And after looking at the airlines - the flight prices - I decided to drive just because of the price of gas.
BRADY: He's not alone. Through the first weekend of the New Year, AAA projects a 4 percent increase in the number of people traveling more than 50 miles by car. A big question for the New Year is how long will the lower prices last?
PHILIP VERLEGER: I think prices will continue to decline.
BRADY: Energy economist Philip Verleger is among those projecting low prices as long as the world's biggest producers keep pumping oil at the current rate. And he's willing to go out on a limb.
VERLEGER: We are going to see a period of really low gasoline prices - not for six months, not for a year, but probably two or three years - maybe four years.
BRADY: As always, geopolitics could disrupt oil production and change that forecast. Oil consumption also plays a factor. World demand has been less than projected. Amy Myers Jaffe at University of California Davis says news out of China could affect oil company profits.
AMY MYERS JAFFE: If the Chinese economy continues to falter, that is certainly going to be a negative for oil and gas prices. I would say that's probably the biggest wildcard out there.
BRADY: Here in the U.S. Myers Jaffe says she does not expect a big slowdown in the oil drilling boom. She says at $50 a barrel, drillers in Texas may not be able to swim in champagne, but she says they'll still be able to drink it. Jeff Brady, NPR News, Philadelphia. Transcript provided by NPR, Copyright NPR.