US households to spend US $550 less in gasoline in 2015:EIA

The average US household is expected to spend about $550 less on gasoline next year compared with this year as annual motor fuel expenditures are on their way to post their lowest levels in over a decade, according to a report from the Energy Information Administration published December 16.

“Lower fuel expenditures are attributable to a combination of falling retail gasoline prices and more fuel-efficient cars and trucks that reduce the number of gallons used to travel a given distance,” the EIA said.

Household gasoline costs are forecast to average $1,962 next year, the EIA said adding it will be the first time if five years that they will be below $2000 in a year.

The price for US regular gasoline has fallen eleven weeks in a row to $2.55 per gallon as of December 15, down $1.16 per gallon from its peak for this year in late April and the lowest price since October 2009. Prices are forecast to go even lower next year, it said.

While a big part of the savings is the result of lower crude prices, increases in fuel economy are also contributing to lower motor fuel expenditures, as cars and trucks travel farther on a gallon of gasoline. According to the Environmental Protection Agency, the production–weighted fuel economy of cars has increased from 23.1 miles per gallon from model-year 2005 cars to 28 miles per gallon this year, an increase of 21%. Fuel economy for trucks has increased 19% to 21.1 miles per gallon, it added.

Gasoline accounted for 5.1% of consumer spending as of October, the EIA added.

Demand for gasoline is very price inelastic over short time periods, the report said.

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