Chicago Defender

Gasoline Prices Predicted to Fall in 2013

(AP) — At least gasoline should cost you less in 2013.

Hamburger, health care and taxes are all set to take a bigger bite out of the family budget this year. But drivers' annual gas bills are expected to drop for the first time in four years.

Forecasters say ample oil supplies and weak U.S. demand will keep a lid on prices. The lows will be lower and the highs won't be so high compared with a year ago. The average price of a gallon of gasoline will fall 5 percent to $3.44, according to the Energy Department.

"Everything is lining up to lead to softer prices this year," said Tom Kloza, chief oil analyst at the Oil Price Information Service.

That would still be the third-highest average price ever. But a discount of 19 cents per gallon from 2012 would save the typical household $205 this year and free up $25 billion that could go instead to restaurants, malls or movie theaters — the kind of consumer spending that accounts for 70 percent of American economic activity.

"It's a little benefit to the economy, and it's a little more reason the Fed doesn't have to worry about inflation," said James Hamilton, an economist at the University of California at San Diego who studies energy prices.

Forecasters caution that they can't predict other factors like Middle East tensions, refinery problems or hurricanes along the U.S. Gulf Coast — in other words, the same events that caused gasoline prices to spike in 2011 and 2012. Any or all of those troubles could crop up again in 2013 and push pump prices above last year's record average of $3.63 a gallon.

The government expected gas to average about $3 during 2011. Then came the Arab Spring, which included the shutdown of Libya's oil production. Oil prices shot up, and gasoline averaged $3.53 for the year. The government's forecast for last year also turned out to be too low, by 18 cents per gallon.

And, Hamilton said, consumer spending might not see a boost from lower gasoline prices because most Americans will be paying higher taxes. The expiration of last year's payroll tax reduction will cost an extra $579 for households making $40,000 to $50,000 in 2013, according to the Tax Policy Center, a non-partisan Washington research group.

But after average gas prices rose in 2010, 2011, and 2012, a little relief will be welcome in 2013.

Gas prices set records each of the past two years for a few reasons. Global demand has risen as the developing economies of Asia, Latin America and the Middle East burn more gasoline, diesel and jet fuel. At the same time, unrest in the Middle East has sparked fears of widespread supply disruptions in a region that produces a quarter of the world's oil. That makes traders willing to pay higher prices up front for oil as a way to protect against possible dramatic price spikes in the future.

In the U.S. last year, several refineries and pipelines had problems that reduced gasoline supplies, especially on the West Coast and in the Midwest, helping to push pump prices even higher.

This year, global oil demand is expected to rise slightly again, but increased production, especially in the U.S., should keep supplies ample. The U.S. Energy Information Administration said this week that American production will grow next year by 900,000 barrels per day, the nation's biggest single-year increase ever. By 2014, U.S. production will reach its highest level since 1988.

At the same time, U.S. gasoline consumption is back down to 2002 levels because of more fuel-efficient cars and the tepid economy. It isn't expected to rise this year or next, according to the Energy Department.

That means the U.S. will need to import less oil, which will increase global supplies and help tamp down prices somewhat.

The current average retail price of gasoline is $3.31 per gallon, 6 cents lower than last year, according to AAA, OPIS and Wright Express. AAA predicts gas won't surpass $3.80 a gallon this year.

The peak last year was $3.94, reached in April. The auto club also says average pump prices could drop as low as $3.20, a level that the country hasn't seen since February 2011.

Tom Kloza of OPIS expects price differences between regions of the country will remain large, and local prices could be volatile as supplies build and dwindle. In Utah, drivers are paying $2.88 per gallon on average, while in New York drivers are paying $3.75. Just in the last four months, gasoline supplies on the West Coast fell to their lowest level in a generation, then rose to where they are now, their highest level in a generation.

AAA forecasts the national average will peak between $3.60 and $3.80 in the spring, then drop to between $3.20 and $3.40 by mid-summer. It will rise again during the hurricane season along the Gulf Coast, the nation's oil-refining hub, before moving lower toward the end of the year.

It's that up-and-down movement that will dictate drivers' moods. Drivers tend to remember what they paid for their last fill-up — not that they may have paid a little less a year ago, Hamilton said.

"People have a short reference point," he said.

Jewel-Osco to Be Sold to Investor Group

The parent of Jewel-Osco said today it would sell that chain and several other businesses to an investor group led by Cerberus Capital Management L.P, reported Crain's Chicago.

Jewel-Osco has about 180 stores, the vast majority in the Chicago area. The chain has about 25,000 employees.

In addition to Jewel-Osco, Eden Prairie, Minn.-based Supervalu is selling Albertsons, Acme, Shaw's and Star Market stores and Osco and Sav-on in-store pharmacies to the investor group.

Besides New York-based Cerberus, the buyer group includes Kimco Realty Corp., Chicago-based Klaff Realty L.P., Lubert-Adler Partners and Schottenstein Real Estate Group, Supervalu said in a statement. The deal is valued at $3.3 billion, the company said.

Stock in Supervalu Inc. jumped, with shares up 16 percent shortly after the market opened.

Read more at Crain's Chicago Business.

Postal Service's Fiscal Cliff Coming This Spring

(CNNMoney) -- The U.S. Postal Service is facing its own fiscal cliff this spring.

But it is in danger of being overshadowed by bigger fiscal issues facing the nation. When Congress returns to work in less than two weeks, lawmakers will already have a full plate of deadlines on issues that threaten to devastate the U.S. economy -- from raising the debt ceiling, to automatic budget spending cuts that will lead to thousands of federal and private sector job cuts.

For the cash-strapped U.S. Postal Service, the cost of being ignored by Congress means that it will be on the brink of bankruptcy. For the American public, it could result in cutbacks on mail delivery. For postal employees, job cuts.

The postal service wouldn't say exactly which day its money runs out. But a November financial report warned that the agency will have about $1 billion in cash during one particularly tough period in March -- barely enough to keep the agency running for four days.

This situation isn't new. The postal service has been in a financial bind for several years, borrowing billions of dollars from taxpayers to make up for shortfalls caused by a 2006 congressional mandate, under which it has to pre-fund healthcare benefits for future retirees. What has made things worse is that technological advances has also led to a decline in first-class mail, the kind of snail mail most consumers use to either stay in touch or pay bills.

The situation turned particularly dire last year -- the agency twice defaulted on payments totaling $11 billion, and it exhausted a $15 billion line of credit from the U.S. Treasury.

Postmaster General Patrick Donahoe said in a statement last week that Congress' "lack of action is disappointing," and he warned that officials would be pursuing a "range of accelerated cost-cutting and revenue-generating measures."

In the past year, the Postal Service has cut hours at thousands of post offices -- some are open for only two hours a day. It has also merged some of its plants, which led to a 28,000 drop in its workforce, according to spokeswoman Sue Brennan. All of it was achieved through attrition, which includes retirements and departures by employees who couldn't relocate or take up new jobs.

In the last few months, the agency has had enough cash to keep running and pay its employees and contractors due to the influx of election and holiday season mail.

The top House Republican and Senate Democrat say they had worked together during the fiscal cliff talks in December, though no resolution was reached on how to save the postal service.

"While our approaches have differed in the past, we made significant progress in narrowing our differences in recent months," wrote Rep. Darrell Issa of California and Sen. Tom Carper of Delaware. "Our commitment to restoring this American institution to long-term solvency is unwavering."

The statement lacked specificity in details of when, or how, they would achieve that goal. But congressional aides say they're hopeful it'll get passed soon.

The U.S. Postal Service is, by law, an "independent establishment" of the executive branch. The agency doesn't normally use tax dollars for operations, except for its loan from Treasury. In 2005, the Postal Service had no debt, officials said.

No More Paper Social Security Checks Come March

(CNNMoney) -- Millions of Americans still receiving paper checks for Social Security and other federal benefits have less than two months to switch to electronic payments.

In an effort to cut spending, federal officials began retiring paper checks in favor of direct deposits and prepaid "Direct Express" debit cards in May 2011. Since then, the Treasury Department has required all new recipients of payments from federal benefits programs -- including Social Security, Supplemental Security Income disability, Veterans Affairs and government pension plans -- to sign up for electronic payments. It set a March 1, 2013, deadline for all other recipients to do the same.

Roughly 93% of payments are now being made electronically. But about 5 million checks are still mailed each month -- representing an additional $4.6 million in monthly costs since each mailed check costs 92 cents more than a direct deposit transfer, Treasury officials said Tuesday. The agency said if it didn't push for the switch to electronic transfers it would cost taxpayers another $1 billion over the next 10 years.

So now, the agency is urging remaining check recipients to beat the March 1 deadline. The department has partnered with more than 1,800 local, regional and national banks, credit unions, social service agencies and community groups to get the word out through mailings, public service announcements and its web site.

Anyone who fails to make the change will still receive paper checks, but will be the target of more aggressive communication efforts, such as additional mailings, said Walt Henderson, a Treasury official.

"We won't interrupt their payment, but we will be communicating with them in a more personal direct way," he said. "After March 1, they are not in compliance."

California, Texas and New York have the largest number of residents who have yet to convert to electronic payments, with more than 1 million people receiving monthly Social Security and disability checks as of November.

Electronic payments are safer than paper checks, Henderson said. In 2011, more than 440,000 Social Security checks were reported lost or stolen, while $70 million worth of checks were fraudulently endorsed.

"It's just really the best way to receive your payment," Henderson said.

Still, electronic payments come with their own fraud concerns.

Related: Scam targets seniors' Social Security benefits

In September, Patrick O'Carroll, inspector general of the Social Security Administration, told Congress that identity thieves fraudulently redirected seniors' benefit payments to different bank accounts using stolen Social Security numbers.

To prevent fraud, officials recommend that seniors never provide personal information to unsolicited callers and always check with a local Social Security Administration Office if contacted by someone claiming to be an administration employee. "The government won't call you asking for information," Henderson said.

To report suspicious activity, contact the Social Security Fraud Hotline at 1-800-269-0271.

To sign up for benefits, recipients can visit www.GoDirect.org, call a toll-free helpline at 1-800-333-1795 or speak with their local bank or credit union representative.

Recipients must have their Social Security or claim number, 12-digital federal benefit check number and the amount of their most recent federal benefit check. For direct deposit, recipients also will need their financial institution's routing transit number, (often found on a personal check) account number and account type (checking or saving).