Falling gas prices lift economy
A more than 30-cent drop from last year puts cash back in consumers' pockets and could help counter recent cuts.
Surprisingly, it's at the pump. Over the past three weeks, the price of oil fell 9% to $89 a barrel. While a short supply of expendable income also may be tamping down demand for gas a bit, both the Department of Energy and AAA note that the average price of a gallon is down more than 33 cents from a year ago.
The average price for a gallon of regular gas is hovering around $3.55, but research firm Capital Economics told CNN it estimates that price will slide to nearly $3.40. That would save American consumers roughly $80 billion over the course of 2013, which is about the size of the sequestration cuts.
It's a bit too late for falling gas prices to help growth in the first quarter, which economists are estimating at 3% before the government releases those numbers later this week. It could, however, soften the blow of other cuts and bolster spending in the second quarter.
Still, some companies complain that consumer spending was stifled well before the sequester. The expiration of payroll tax cuts that followed the fiscal cliff deal shrunk paychecks, blunted the impact of state-by-state minimum wage hikes and gave consumers less expendable income to blow at discount stores like Family Dollar (FDO) and Dollar General (DG) or eateries like Brinker International's (EAT) Chili's and Darden Restaurants' (DRI) Red Lobster and Olive Garden.
That doesn't mean there isn't reason for consumers to cheer lower gasoline prices or the trends that may keep them low for some time. Gasoline prices typically rise in the late winter and spring as refiners shut down parts of their plants for maintenance and begin making more costly blends of gasoline required by federal clean-air regulations. That didn't happen this year, as prices were 15 cents shy of last year's peak.
A big reason for that is increased oil production in the U.S. and Canada, which is boosting global supplies. It also helps that North Africa and the Middle East haven't been plunged into further political turmoil and that U.S. refineries have been remarkably calm after supply disruptions in California and along the East Coast last year.
A $0.30 per gallon drop equals about $4.50 a week in savings. Can't even get a decent lunch for that amount.
Really where? Here the price is set by two men who own all the stations. When complaints were made to the state the attorney general said "Well they have to make a profit." 30 miles from here it is 30cents cheaper. 50 miles 50 cents cheaper.
Price fixing anyone.
Falling gas prices!! Are you guys idiots? Two days ago the price per gallon at my local station was $3.81. Today it is $4.15!!
I can't even call you guys "masters of the obvious" any longer! Just masters of the completely
Gas prices hurt low income people the most. Let's get the pipeline built and have U.S. and Canadian oil flowing across the country. No more $$ going to the Middle East or other countries that hate us.
Put controls on speculators, especially those who never take delivery.
Gas was $3.34 in central MN today. Great!
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