Monday’s record eruption in the stock market was one cause for celebration. Lower energy prices are another, at least for consumers.
Even with a bounce Monday, crude oil is down about 45 percent from its peak and natural gas is down more than 50 percent. The declines are showing up at service stations, where gasoline prices dropped nearly 6 cents a gallon at Tarrant County pumps from the previous day, and in electricity prices, where spot prices are down about two-thirds from summer highs.
"Two weeks ago, who would have thought gasoline would be this cheap?" said Jim Ervin, Tarrant area manager at AAA-Texas. "The refineries are back up from Hurricane Ike, demand is a lot lower than this time last year, and supplies are plentiful," he said.
The nationwide Lundberg Survey reported Monday that gasoline saw its biggest two-week drop ever, falling an average 35 cents to $3.31 as of Oct. 10. Analyst Trilby Lundberg said the national average could drop below $3 a gallon by December.
That’s already happened in many parts of Tarrant County. Monday, a number of stations reported prices well below $3, including reports of price wars in Burleson, east Fort Worth and west Fort Worth that dropped prices below $2.70, a price not seen for about a year locally, according to AAA-Texas.
At the intersection of Las Vegas Trail and Interstate 30, dueling stations were at $2.64 a gallon for regular unleaded. There was a stream of motorists in line to tank up at that price Monday evening.
AAA said the average price in the Fort Worth-Arlington area was $3.03, down more than 50 cents a gallon from a month ago.
"People are simply using less fuel," said Chris Newton, president of the Texas Petroleum Markets and Convenience Store Association in Austin. He said output from refineries along the Texas coast, disrupted by Ike, rose an additional 6 percent last week, erasing spot shortages seen in the weeks after the storm pummeled the Houston area.
The same storm gave electricity prices a push lower, said St. Clair Newbern, president of Fort Worth-based Live Energy, which advises commercial electricity buyers.
"After the hurricane, we saw a lot of demand reduction. That was a trigger," Newbern said. "The prices have been soft since then."
He said that in the wholesale markets, prices are down about 10 cents per kilowatt-hour compared with early summer, which he called "just unbelievable."
The price of electricity in deregulated Texas markets is driven by natural gas, which also has tumbled since summer.
One-year contracts for residential customers have also declined but not nearly as much..
Jerry Dyess, president of Arlington-based Choose Energy, an online electricity shopping site, said the average one-year residential contract purchased through his site cost 12.9 cents a kilowatt-hour. That was down 19 percent from the June average of 15.8 cents, he said.
Still, prices are about 1.5 cents a kilowatt-hour above the same period a year earlier, when natural gas prices were similar. Dyess said the spread between commercial and residential is somewhat higher than average currently, but he expects it to narrow.
"I think you’ll see a dip in the next seven to 10 days" in residential prices, he said, citing seasonal patterns.
Whether oil and natural gas prices stay down is a question, but Monday, a number of analysts released new outlooks that are considerably more cautious than the predictions of $150 and $200 just months earlier. Monday, crude-oil futures rose about $3.50 a barrel to $81.19, while natural gas futures inched up 15 cents to $6.69.
Goldman Sachs, which earlier had forecast oil to hit $200, said it expects crude oil to stay between $70 and $115 a barrel at year’s end. The investment banker forecast 2009 prices between $107 and $125, on the basis of weak economic growth. Raymond James & Associates cut its outlook to $95 a barrel for the current quarter, down from $120, and to $90 for 2009, down from $142.50.
A third firm, Natixis Bleichroeder in Houston, slashed its estimates the most, forecasting $75 a barrel for oil in the fourth quarter and $80 in 2009.