Weak economy to ease energy costs for consumers

By Ayesha Rascoe

WASHINGTON (Reuters) - One bright spot in the current economic slump is that Americans will get a break when filling up the pump next year and heating their homes this winter, the U.S. Energy Information Administration said on Tuesday.

The EIA said in a report that it expects U.S. regular unleaded gasoline to average $2.03 a gallon in 2009, down significantly from the 2008 average of $3.27 and off earlier forecasts of $2.37 for next year.

"A fall in gasoline prices allows consumers to spend less on fuel and more on something else," said Jerry Taylor, a senior fellow at the Cato Institute.

"So in that sense, falling gasoline prices are akin to a tax cut in that a tax cut allows consumers to spend less on government and more on something else."

U.S. gasoline prices soared in this year to a record above $4 a gallon this summer as crude oil prices skyrocketed to over $147 a barrel, adding to the pain of consumers already feeling the sting of the global financial crisis.

Fuel costs have since tumbled as crude oil prices dropped, hitting $43 a barrel on Tuesday, as the economic crisis erodes demand in the United States and other top consumers.

The price collapse should also mean hundreds of dollars in savings for Americans who use heating oil in their homes.

The EIA expects heating oil costs to fall 24 percent this winter, with spending on propane seen down 14 percent, with natural gas down a slight 1.3 percent.

In the U.S. Northeast, which is the world's largest heating oil market, consumers will spend on average $1,611 for heating oil this winter compared with $1,998 last winter. Nationwide, heating oil is expected to average $2.53 a gallon, down from $3.31 last year.

(Reporting by Ayesha Rascoe; Editing by Marguerita Choy)