After months of grim forecasts and overwrought predictions, gas prices did the exact opposite of what was predicted and took a nosedive. According to gasbuddy.com the average price in Columbus is $3.27 a gallon, with the lowest prices being $3.23 a gallon at Murphy USA. The highest price was found at Sandfield One Stop with a price of $3.39 a gallon.
But what do lower fuel costs, especially at the beginning of the summer season when crude oil prices usually skyrocket mean for the City of Columbus? Chief Financial Officer Mike Bernsen said the drop in prices gave a narrow window of budgetary breathing room.
“This really doesn’t do a lot for us in terms of the city’s budget,” Bernsen said. “We make a guess or estimate of what gas prices are going to be for a year in advance. We budgeted our fuel cost for 2012 as a line item in the budget which was passed last September. We truly have no idea of what fuel is going to cost. We are at the mercy of the distributors. We are no longer allowed to lock into quotes. We are basically just making a guess and throwing a dart and hoping we stay within the budget. Prices have been so high this year that this little bit of relief is at best going to keep us within our budget for the year. I think we budgeted fuel at $3.70 a gallon for 2012.”
Bernsen said the city spends an estimated $550,000 annually in fuel. The gasoline and diesel is purchased from a distributor and delivered in bulk to the city garage near the Lowndes County Adult Detention Center. City employees are given a pass code, allowing them to get fuel for city vehicles only. Columbus Light and Water also purchases its fuel from the city’s garage.
With gas prices averaging around $3.87 only two months ago, Lowndes County Administrator Ralph Billingsley echoed Bernsen’s sentiments on the drop being “too little, too late.”
“Our budget is still running higher,” Billingsley said. “We are in the process of preparing next year’s budget right now. It will be approved by the supervisors in September. Everything is already locked in. This drop in prices does help some, especially from two months ago, but we are still hurting.”
The US Department of Energy recently released a statement saying gas prices on the national average should not exceed $3.60 between now and September, the peak usage time for many Americans. And lower fuel prices could increase consumer confidence.
If gas prices stay low, Americans are likely to spend more freely this summer on other goods, from autos and furniture to electronics and vacations, that fuel economic growth. Gasoline purchases tend to provide less benefit for the U.S. economy because some of the money goes to oil-exporting nations.
“The continued fall in gasoline prices should support consumption by freeing up cash to be spent on other items,” said Paul Dales, senior U.S. economist at Capital Economics.
Ian Shepherdson, chief U.S. economist at High Frequency Economics agreed. “The drop in gas prices means summer spending will accelerate,” he said.
Retail sales fell 0.2 nationally percent in May and April, the Commerce Department said. It was the first back-to-back decline in two years. But overall sales were pulled down by a 2.2 percent decline in gasoline station sales, reflecting the lower prices.
Excluding volatile gas station sales, retail sales grew just 0.1 percent in May and dipped slightly in April.
This story contains additional reporting by the Associated Press.
Jeff Clark was previously a reporter for The Dispatch.
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