Cliff Wolf had just fueled up his pickup truck. He replaced the nozzle, looked at the pump total and said with a satisfied smile, “Yeah, I like that.”
A lot of folks are smiling these days. True, some of them are reveling in the spirit of the season, but a fair portion of their holiday cheer derives from lower gasoline prices, a seasonal gift courtesy of international market forces.
Fuel prices have fallen nonstop since Sept. 25 with regular unleaded dropping below $2 a gallon at an increasing number of local filling stations. Last year’s Yuletide prices hovered around $3.25.
Many national and global factors have cooperated in bringing down fuel prices. The U.S. increased its oil production, aided by horizontal drilling technology. Meanwhile, demand for oil has softened in many recessional economies in Europe and Asia. OPEC has refused to cut its production, thus bolstering supply and moderating prices. A strong dollar is also helping push down prices in the international market.
All this is academic to consumers like Wolf, who savors his personal windfall. “I’ll use the extra money for whatever I need it for.”
Don Schmucker, also of Milford, plans to spend his savings “on daily life essentials.” He expressed a sense of consumer entitlement in the plunge in gasoline costs. “I don’t think the prices needed to be that high,” he said.
Businesses benefit from the savings customers experience at the pump, beginning with the filling stations themselves. “It is affecting business really well,” observed Dawn Myers, a clerk at the Friendly Express Mart in Milford. “More people are coming in” and spending more on food and shelf items.
Governmental entities also enjoy a fiscal boost from the price drop.
“The lower fuel price has helped us somewhat so far,” said Scott Tilden, superintendent of the Kosciusko County Highway Department, also noting the tandem benefit of “not pushing snow” thus far this season.
“What we saved in fuel we might be able to transfer to line items like maintenance,” Tilden said. Still, he takes a cautious approach. “We’re still in 2014 and we will see how things progress. We’re not planning anything drastic at this point. Basically we’ll just wait and see right now.”
But not everyone is smiling. Kevin Scott, chief financial officer for Warsaw Community Schools, involves himself with diligent concern about matters such as operating costs, revenue flow and fiscal planning.
“The lower fuel cost certainly helps our transportation operating fund. Diesel prices are budgeted in the fuel line item.” The corporation runs 72 buses, all diesel-fueled, on 55 routes twice a day, so the savings can add up quickly.
Unfortunately, according to Scott, that’s not the whole story. “It is great for consumers but it carries a impact on state (fuel tax) revenue that will in turn have a negative impact on the K through 12 school budget which is over 50 percent of the state budget.”
The timing of the potential shortfall state revenue is critical. Next month the Indiana legislature convenes to craft a two-year budget, which must factor in the diminished tax revenue resulting from lower pump tallies. If prices stay flat, so does revenue for the schools, and professionals like Scott will have to find ways to bridge the funding gap.