Despite the rapid increase in gas prices the past few weeks, a spokesman for the recreational vehicle industry believes it will not directly affect RV sales.
As reported by the South Bend (Ind.) Tribune, the RV market is coming off of a 5.1% increase in RV wholesale shipments in January compared with the same month a year ago, according to the Recreational Vehicle Industry Association (RVIA).
The RV industry employs more than 24,000 people in Elkhart County, including RV manufacturers and suppliers. Northern Indiana builds 82% of all recreational vehicles in the U.S., according to RVIA.
“The fuel prices don’t really impact RV sales quite the way a lot of people might think,” Kevin Broom, director of media relations for the RVIA, said. “Part of it is there’s so much savings already built into RVs that stay when fuel prices rise.”
The RVIA had San Francisco-based PKF Consulting look into that question, Broom said, and it concluded that fuel prices would have to get to nearly $10 a gallon before the most expensive RV — a Class A motorhome — would lose its economic advantage.
For travel trailers, fifth-wheels and folding campers, gas prices would have to rise to $15 to $20 a gallon before those vehicles lose their economic value, Broom said.
People may take shorter trips, Broom said, but people will still use them.
Rising fuel prices, though, can enter into the equation in other ways. The biggest is if they affect consumer confidence, he said. Another factor is the availability of consumer credit, which greatly affected RV sales in 2008.
In the recession, fuel prices did go up, but Broom noted, consumer confidence and credit availability were other key factors.
“There were so many things going on,” Broom said. “Fuel prices did go up, but at the same time we had home foreclosures and a credit freeze and this massive recession that went on. “Did RV sales drop because fuel prices went up or was it because there was this massive economic cataclysm?”
It’s hard to separate each factor, Broom said. “My guess would be that those larger economic factors like decline in home prices, like people losing employment, just the availability of credit,” he said. “Those were probably bigger factors than fuel prices.”
As it is, University of Michigan economist Richard Curtin is predicting a 5.1% increase for RV sales for the year in the spring issue of RV Roadsigns.
Curtin predicts RV shipments will reach 265,200 for 2012, which would be the third straight year of increased sales.
Curtin cited stronger economic growth, increased job opportunities and easing consumer credit as factors.
“We’re encouraged by that,” Broom said. “The economy is showing signs of growing, of recovering.”
Oil prices rose Monday (Feb. 20) after Iran cut exports to Britain and France, raising worries that higher gas prices may follow suit.
CNN Money reported that Iran’s oil ministry said Sunday it would stop exporting oil to French and British companies. The announcement came just days after Iran threatened to cut supplies to some European Union (EU) countries in retaliation for sanctions put in place by the EU and United States.
U.S. crude for April delivery jumped nearly 2% to $105.08 per barrel.
Prices are already up nearly 9% from the start of the year. According to motorist group AAA, the national average price of $3.56 a gallon marks the 13th consecutive increase.
The price of unleaded gasoline in the U.S. will likely hit a nationwide average of $4 by this summer, said Dan Dicker, oil trader and author of “Oil’s Endless Bid.” The last time prices topped $4 was 2008 and Dicker said there’s a one in three chance that gas could reach $5 a gallon.
If gas prices do head to those lofty levels, that could put a crimp in the economic recovery as consumers will likely cut down on spending if they have to pay more to fill up their cars.
Kidd RV Resort Consulting, an integrated marketing firm specializing in the RV industry, has interpreted the results of its five-question survey to analyze the relationship between gas prices and RVers’ travel behaviors from the summer of 2011 to the winter of 2012.
According to a press release, respondents of the 2011 survey indicated that if fuel prices continued to increase, more than 70% of RVers would change their travel plans or behaviors. The percentage of respondents who would change their travel behaviors dropped to 27% in 2012, an indication that more RVers are adhering to their travel plans despite fuel prices. This fluctuation is potentially due to the 16% fuel price decrease that occurred from the summer through December, combined with an improving economy.
Based on survey results, RVers are more committed to paying higher fuel prices and traveling in 2012 as compared to 2011. In 2012, the majority of RVers responded that they would travel until fuel prices reached $8/gallon, while only 7.4% of RVers would pay $8/gallon in 2011. In addition, 55% of participants are planning on traveling more than they did in 2011, 36% planning to travel the same as in 2011 and only 9% traveling less than they did last year.
“Understanding how RVers are affected by industry trends, obstacles and new technologies aids Kidd RV for the purpose of creating more focused marketing objectives and maximizing positive results for our clients,” says Jerry Kidd, president of Kidd RV Resort Consulting.
For detailed charts of RVers’ responses to fuel prices and traveling, visit http://kiddrv.com/news/2012021501.php.
Get ready for another round of pain at the pump: $4 (or higher) gasoline.
USA Today reported that after rising 19 cents a gallon in the past four weeks, regular unleaded gasoline now averages $3.48 a gallon versus $3.12 a year ago and $2.67 in February 2010.
Prices could spike another 60 cents or more by May. “I think it’s going to be a chaotic spring, with huge price increases in some places,” says Tom Kloza of the Oil Price Information Service. Kloza expects average prices to peak at $4.05, although he and other industry trackers say prices could be sharply higher in some markets.
Rising prices are an annual spring ritual, largely because of seasonal demand.
Refiners also switch from winter formulations to more expensive seasonal formulations to meet stringent environmental standards, which can tack on 15 cents a gallon, says Brian Milne of energy tracker Televent DTN.
This year’s earlier-than-usual run-up is more about anticipation than current supply and demand. Last week, the Energy Department reported anemic U.S. consumption — the lowest levels since September 2001. Domestic crude oil prices have fallen in six of the past seven trading sessions on the New York Mercantile Exchange and were about $98 a barrel Monday morning, near six-week lows.
Renewed tensions in the Middle East are bolstering crude prices, while speculators are boosting futures contracts, betting on global supply disruptions and tighter refining capacity. Kloza notes that several U.S. and overseas refiners have experienced temporary or permanent closures.
So far, $4 a gallon has proven to be the upper limit consumers will pay. Last April, national prices peaked at about $3.98 a gallon. In 2008, a sharp run-up ended when prices hit an all-time average of $4.11 a gallon that summer.
“Higher demand, Iran, lost refining capacity are all potential problems,” Milne says. “We’ll get over $4 a gallon, but it’s going to be tough to sustain that level. People will drive less.”
As the U.S. economy recovers and adds more jobs, Americans are paying the price at the gas pump.
According to an Associated Press report, the government said Friday (Jan. 6) that the nation’s unemployment rate dropped to 8.5%, the same day that gasoline prices hit an average of $3.35 a gallon, the highest ever for this time of year.
Gasoline prices are rising again after falling in the last months of 2011. Motorists are buying less gas than they did a year ago, but pump prices are rising with higher oil prices.
“It’s difficult to raise prices when gasoline demand is so anemic,” said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. But if the cost of oil goes up, “you have to pass it along” to the consumer, he said.
Kloza expects pump prices will average between $3.75 and $4.25 a gallon this year. They could be around $4 a gallon by spring.
Oil prices at the start of 2012 continued the climb they started last year. The price of benchmark U.S. crude rose 19% in 2011 to an average of about $95 a barrel. The price of benchmark crude rose 3% this week, though it fell slightly on Friday.
Wednesday (Nov. 16) WTI crude oil closed at $102.59 per barrel. It’s the first time ever that oil has closed above $100 per barrel in November. And gas prices are going down?
Yes, they are. According to GasBuddy.com, today’s national average price of gasoline ($3.41 per gallon) is notably less than the average price at the pump the last time crude oil traded in the $100-range. It wasn’t long ago. From February through March WTI crude on the New York Mercantile Exchange traded at the $100-plus per barrel level and the retail price of gasoline climbed steadily from $3.50 to $3.90 per gallon during the same period.
“Nobody wants to jinx the downward trend by actually asking the question, but everybody is wondering the same thing: Why are gas prices going down instead of up?” said Gregg Laskoski, senior petroleum analyst for GasBuddy.com.” The answer, we believe, lies in the current disconnect between crude and pump prices. The two usually move in tandem, but this is one of those instances where the exception to the rule occurs, and when that happens, consumers notice immediately.
“WTI is now yielding to the pressure exerted by the increasing importance of Brent crude and the fact that Brent is a more accurate reflection of global value. As a result, WTI’s price is rising to close that gap,” he added.
At the same time, both refinery utilization and total gasoline production have increased according to the most recent data from the Department of Energy. Additionally, gasoline futures are at their lowest level since February 2011 and that facilitates the seasonal decline for wholesale and retail prices.
The new normal for gasoline prices continues to plague American consumers, according to a report by the Los Angeles Times.
Over the last week, the average price of a gallon of regular gasoline in the U.S. stabilized, down 1.4 cents to $3.462 a gallon after jumping nearly 6 cents a gallon the previous week, according to the Energy Department’s weekly survey of service stations.
But that’s 22.6% higher than the old record for this week of the year, which was an average of $2.823 a gallon set in 2007. For the same week in 2010, the U.S. average was $2.817.
Analysts say that world demand for refined fuels is keeping U.S. gasoline prices high, in part because the U.S. is exporting record amounts of fuel. In addition, U.S. refineries also are processing more diesel, at the expense of gasoline production, to meet that global demand.
U.S. drivers are poised to shatter the old record for gasoline spending of $449 billion in 2008 by shelling out an estimated $491 billion this year.
“It’s like we just can’t ever get a break,” said Phil Flynn, an analyst for PFGBest Research. “This has really been a bad year for fuel prices.”
There has been some hope that the end of hostilities in Libya might quickly bring down world oil prices, “but I just don’t see it happening,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, a website that tracks the prices of fuel.
Oil got a boost from signs of economic growth in the U.S. and Asia and from hopes that a solution to the European debt crisis was near.
Soaring gasoline prices are in the rearview mirror, according to an Associated Press report.
For the first time in months, retail gasoline prices have fallen below $3 a gallon in places, including parts of Michigan, Missouri and Texas. And the relief is likely to spread thanks to a sharp decline in crude-oil prices.
The national average for regular unleaded gasoline is $3.51 per gallon, down from a high of $3.98 in early May. Last week’s plunge in oil prices could push the average to $3.25 per gallon by November, analysts say.
Economist Philip Verleger equates it to “a stimulus program for consumers,” leaving them more money for clothes, dinners out and movies. Over a year, a 50 cents-per-gallon drop in gasoline prices would add roughly $70 billion to the U.S. economy.
Arthur De Villar, a 48-year-old safety inspector for the Federal Aviation Administration, paid $2.96 for gasoline near his home in Manchester, Mo., a suburb of St. Louis — and he recently replaced his SUV with a four-door sedan.
With three boys at home between the ages of 11 and 14, the money De Villar saves on gas still gets spent. But it goes to the amusement park, a Cardinals baseball game or the movie theater.
“It’s far better to be able to put (the money) anywhere other than in the gas tank,” he says.
Prices for oil, gasoline and other commodities dove last week along with world stock markets over concerns the global economy is headed for another recession. When economies slow, demand for gasoline, diesel and jet fuel falls as drivers cut back on trips, shippers move fewer goods and vacationers stay closer to home. Oil fell to $79.85 per barrel Friday, a drop of 9% for the week. Oil reached a three-year high of $113.93 on April 29.
Economists caution that gasoline savings, while welcome, won’t matter much to people if the worst economic fears come to pass.
“Yes it produces some relief, your bill at the gas pump goes down, but it’s going down because there are worries that people won’t have jobs,” says James Hamilton, an economics professor at the University of California, San Diego. “The news has not been good.”
And gasoline prices remain historically high. Gasoline has averaged $3.56 this year, the highest yearly average ever. Americans have cut back driving in the face of high prices, but they are likely to spend more on gasoline in 2011 than ever before — close to $490 billion, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.
Kloza says the latest drop in prices will stick around through most of the fall. And while that may only add $20 a month to a typical commuter’s wallet, drivers say it matters.
If there’s any relief from the turmoil that’s been rocking the markets it’s this: The cost of filling up your gas tank is falling, despite gyrations in the per-barrel cost of oil, and experts expect it to continue to do so up to and beyond Labor Day, according to a report on CBS MarketWatch.
“After a year of bad luck with gas prices, consumers will see prices come down at the pump pretty dramatically in the coming weeks,” said Phil Flynn, energy analyst at PFGBest Research.
“As we approach the end-of-summer driving season, when we flip back to cheaper blends of oil and we’re seeing that the global demand for oil was not as strong as we thought it would be, we could see prices fall as much as 25 cents to 50 cents at the pump,” he added.
In the past week alone, the price per gallon of gasoline has tumbled 7 cents to a U.S. average of $3.63 on Aug. 10, according to AAA’s Daily Fuel Gauge Report. That’s on par with month-ago averages, yet still painfully higher than the year-ago average of $2.78 a gallon.
And though gasoline demand is down roughly 2% compared to a year ago, the prices are at the second-highest level ever, AAA said. The record was set July 17, 2008, at $4.11 a gallon average throughout the country.
On Wednesday, the barrel price for crude oil futures climbed to $82.89, off of Tuesday’s all-year low, after the Energy Information Administration turned in four-week results of slumping demand, following a five-month trend. The consumer call for oil byproducts has fallen as gasoline costs have risen but the jump in crude-oil prices Wednesday was powered by speculation that the Federal Reserve will pump more money into the economy to stimulate its growth.
The spring and summer seasons tend to be toughest on gas prices. This year was no exception, but there were outside forces like civil unrest in the Mideast and the flooding that overwhelmed much of Mississippi that disrupted production, keeping prices higher than they might normally have been through July.
Prices typically peak the first two weeks of May, like they did this year at $3.98 a gallon on May 5. Then prices moderate some before climbing again ahead of the Memorial Day weekend. This year, however, prices went down slightly, to $3.79 a gallon by May 30.
Bucking the historical pattern again, they tumbled to $3.57 a gallon by the Independence Day weekend, according to AAA. But they inched back up this year after the holiday and have stayed at those loftier levels until this week.
“We don’t know how much the price of gasoline will decrease in coming weeks, but we think the downward pressure will continue,” said Troy Green, AAA’s spokesman.
That’s good news to consumers who were planning on getting behind the wheel for the last-hurrah road trip before school starts, and more importantly, for families living on fixed incomes or paycheck-to-paycheck.
Call it an Independence Day discount.
Gasoline prices usually peak in the summer. This year, however, they peaked on May 5. The Associated Press reported that the subsequent slide in pump prices has made gasoline an average 24 cents per gallon cheaper than what it was on Memorial Day.
The national average now stands at $3.55 per gallon. That’s the cheapest gasoline has been since late March. It’s still higher for this time of year than any other year except 2008, however.
Prices have persistently declined since May, following a similar drop in oil prices.
Benchmark West Texas Intermediate has given up more than 16 percent since the beginning of May. The contract for August delivery lost 25 cents to $95.17 per barrel Friday on the New York Mercantile Exchange.
In London, Brent crude fell $1.22 to $111.32 per barrel on the ICE Futures Exchange.
Oil fell after China reported that its manufacturing industry cooled off in June, slipping to its slowest pace in 28 months. Activity slowed down as credit tightened due to inflation-fighting measures and weaker oversea demand. The country is still expected to drive world oil demand for years to come, but slower manufacturing growth means demand for fuels may not grow as quickly.