There was a nugget of good news that seemed to get lost in the rising tide of negativity yesterday.
The U.S. Energy Information Administration is lowering its forecast for gas prices this summer. The EIA was originally estimating that drivers would pay an average of $3.95 per gallon between now and September, but the agency is now projecting an average price per gallon of just $3.79.
It's easy to see why the outlook for pain at the pump is easing. Retail gas prices have inched lower for five consecutive weeks, and the decline isn't over yet. Oil crude futures have fallen by nearly 9% over the past five trading days, settling yesterday at a three-month low.
Things can obviously change quickly, but this comes as a welcome break for the travel industry, which saw visions of $4 and even $5 gallons of gas during the peak summertime travel season.
Let's take a look at four stocks -- some obvious and some not so -- that stand to benefit if gas prices continue to descend.
The premise of Zipcar is simple. Members needing a car can rent one of the company's thousands of automobiles by the hour or by the day. Zipcar has a presence in several densely populated metropolitan cities as well as more than 200 college campuses.
It's working. Revenue grew 20% in Zipcar's latest quarter, and there are now 709,000 members.
What's the gasoline connection here? Well, a major draw with Zipcar is that members pay as little as $8 an hour for the rental, and that includes gas and insurance. Free gas? Well, not exactly. Obviously Zipcar has to pay for it.
Sirius XM Radio
Satellite radio may not seem like an obvious beneficiary of lower refueling costs, but think about it. If folks hold back on leisure driving and turn to carpools and mass transportation for their morning commutes, how much time does that leave them to consume premium radio in a car?
There's also the matter of discretionary income. If folks are using up their money on filling up at the tank, how much does that leave for Sirius XM's $14.49 a month subscription rate? If drivers associate gasoline and satellite radio with costs of driving, aren't they likely to give up the latter if the former gets more expensive?
Sirius XM may feel pretty encouraged about the pricing elasticity of its service these days. It bumped its rates higher in January and its audience didn't flinch. However, it would much rather be testing that elasticity when its listeners have more money for ear candy.
Redbox poses a compelling value proposition for a movie buff. Rent any DVD for $1.20 a night. Blu-ray discs and video games are just a little bit more.
The rub, of course, is the chore of making two round trips to rent and then return the disc. Redbox helps ease that pain by striking deals with high-traffic retailers, placing its automated kiosks in places where people already are. However, most people still have to choose to drive to a Redbox machine.
As gas prices inch higher, the more compelling argument is to just rent the movie on pay-per-view if it's a new release or rely on mail-based DVD services. Netflix
Coinstar's fast-growing Redbox subsidiary would rather see friends of film looking forward to driving over to its machines because gas prices are cheap.
Cruise ships may not seem like fuel hogs, but they are.
Fuel is such a major component of Carnival's cost structure that it reports its cruise operating costs two ways -- with and without fuel.
The world's largest cruise line felt the pain as prices moved higher last year. Fuel prices in its most recent quarter climbed 30% -- from $542 million per metric ton to $707 per metric ton -- and that difference alone cost Carnival an additional $137 million in expenses during the quarter. Clearly the math gets kinder when fuel prices are on their way down.
Drive, she said
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The Motley Fool owns shares of Zipcar. Motley Fool newsletter services have recommended buying shares of Coinstar, Netflix, and Zipcar. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.