By Guy Page
Vermonters are paying less for gasoline, propane, diesel, kerosene and heating oil this month compared to last September. Industry analysts say this downward trend is likely to continue. Headliners examines the reasons for this windfall, its impact on the average Vermonter, and how consumers can invest savings in long-term economic and environmental benefits.
A Vermont Public Service Department report shows an across-the-board drop in the average retail price of all petroleum-based fuels this August in comparison with September, 2018.
Fuel Type August 2019 September ‘18 % Decrease
Diesel $3.07 $3.25 – 6%
Kerosene $3.05 $3.33 – 7%
No. 2 Fuel Oil $2.65 $2.90 – 9%
Propane $2.25 $2.57 – 9%
Gasoline (Reg.) $2.74 $2.90 – 6%
Why is this happening? According to Doug Whiteman of Moneywise, U.S. prices have dropped due to “supply and demand” and should continue to do so. Supply is up because the U.S. is pumping more oil. The development of hydrofracking technology and the support of the Trump administration for domestic production has turned the U.S. into the leading producer of oil. US production has more than offset cutbacks in OPEC nations. In fact, Texas alone will soon be pumping more oil than any OPEC nation other than Saudi Arabia.
Meanwhile, global demand is down thanks the economic slowdown occurring virtually everywhere except the U.S., due in part to concern about a tariff war. In China, the No. 2 consumer of gasoline after the United States, demand is way down due to its economic woes.
Other reasons for low US prices include the purchasing power of the strong U.S. dollar; recovery by refineries plagued by fire and shutdowns; bad weather in tourist areas of the United States suppressing gasoline demand; and good weather in the oil-producing Gulf of Mexico boosting supply.
How much will Vermonters save? According to 2017 data, the average Vermont homeowner uses about 700 gallons of heating oil. The average driver drives 12,500 miles, which at @25MPG requires 500 gallons of gasoline. At the decreased rates cited above, consuming the same amount of fuel will mean annual savings of $175 for heating oil and $80 for gasoline.
Of course no-one knows how much prices will continue to drop, or even if they will. But if they do, Vermonters can decide how to invest the windfall, small or great. Many Vermonters will gladly say thanks and apply savings to the rising cost of health care, school taxes, etc. etc. On the other extreme, Gov. Phil Scott and the Legislature could decide to rain on the energy-savings parade by increasing the cost of gasoline through the “stealth” regional carbon tax now under consideration by the Transportation Climate Initiative. Still other Vermonters will plan for an energy “rainy day,” diversifying against a possible spike in oil prices while reducing carbon emissions by investing in home battery storage, electric cars, a new wood products stove, etc..
Vermonters and their state government may disagree on how to spend the projected energy savings windfall. But no-one – except maybe alternative power advocates who want oil prices to rise because it makes their products look more attractive by comparison – is complaining about it.
Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont