Christmas comes early at the gas pump
Even with a recent slight uptick in prices, Americans are paying about 20 cents less for a gallon of gasoline than at this time last year.
This post comes from Beth Braverman at partner site The Fiscal Times.
National average prices ticked up a few cents this week, but at a current $3.20 per gallon, they're still more than 20 cents lower than they were a year ago. They've been on a downward trend since Labor Day. In fact, we're paying the same amount today per gallon as we did in 1980 -- 33 years ago, adjusted for inflation, when the average price was $1.13.
The drop in prices reflects a variety of factors including a seasonal slowdown in demand, a quieter-than-normal hurricane season in the Gulf, and increased domestic production. The United States is expected to pass Russia and Saudi Arabia to become the world’s top oil producer by 2015.
"Until a few years ago, the great problem in North America was the uncertainty of supply," says Tom Kloza, chief oil analyst with GasBuddy.com. "Now the problem in North America is uncertainty of demand."
Although the nominal price of gas has increased nearly six-fold since 1976, the real price has only increased about 43 percent, according to the U.S. Energy Information Administration.
Gas prices in five states have fallen below $3 per gallon, but that’s not a trend expected throughout the country. Through January, prices will likely remain in the $3.05-$3.15 band, Kloza predicts.
Kloza believes that low gas prices throughout this year will mean Americans will have directly spent a collective $12 billion less fueling their cars in 2013 than in 2012.The average annual price for a gallon of gas is expected to average $3.50 per gallon in 2013, and to fall to $3.39 per gallon next year, according to the U.S. Energy Information Administration. In 2012, gas prices averaged $3.63 per gallon.
While economists agree that the lower prices will likely remain in place through the end of the year, but they're divided as to whether that trend will translate into a more consumer spending on the all-important holiday season.
Ben Herzon, a senior economist sees the gas prices leading to an increase in consumption of just $2.5 billion to $3 billion in the fourth quarter, a negligible amount in overall economic growth. "In terms of gross domestic product growth, that barely rounds up to 1/10 of a percent," Herzon says.
Carl Riccadonna, a senior economist with Deutsche Bank, sees gas prices adding $12 billion to $26 billion to the economy, a considerably higher but still relatively modest amount in terms of GDP. "However, [prices are] having some impact on consumer spending patterns -- as evidenced by the falling share of retail sales going to gas stations in retail months," he wrote in a recent research note. "Thus the ongoing decline in gasoline prices is providing a modest tailwind to consumption at a critical time of the year for retailers."
Retailers can use all the help they can get, given the shortened holiday shopping season (Thanksgiving and Christmas are six days closer together this year than in 2012), and waning consumer confidence. The Reuters/University of Michigan Consumer Sentiment Index fell 1.2 points in October to 72, its lowest level in more than two years.
Still, holiday sales are expected to increase 3.9 percent this year, to more than $602 billion, according projections from the National Retail Federation. That's a small uptick from the 3.5 percent hike in sales last year, and higher than the 10-year average holiday sales growth of about 3.3 percent.
More from The Fiscal Times:
- Cautious consumers may make ho-hum holiday sales
- The dark side of the North Dakota oil boom
- 6 steps to smarter holiday shopping
i live in the NY metro area and gas on Friday was $2.97 a gallon....yesterday, (3 days later) the same stations jumped to $3.13 a gallon (.16 cent increase). Is that a slight uptick???
Gas is overpriced at $2.05 per gallon....
Therefore a 20 cent decrease in a greatly inflated price
of $3 a gal or more is no great Christmas at the pumps!!!
The Price of gas throughout this year prevents me from purchasing too many gifts during this holiday season last season and probably next season as well.
A majority of my money goes into that gas tank thus no extra to spend on the Holiday Season, thus most of my gifts shall be homemade this years and wrapped in extra newspaper!
One day this nation will wake up to the damage of Greedy Corps, especially those in the Oil Biz! In fact I don't think that our economy will ever recover as long as the price of gas remains highly inflated!
Another bullsh*t, propaganda article from the propaganda-pushing media.
Do they honestly believe that this makes anyone feel good about (or better) about the present administration (or any administration, for that matter) and/or the current state of the economy???
I still remember the .99cent gas wars at the pumps during the 90s. If this new nuclear deal with Iran actually does go through, we should be seeing record lows prior to 2000 once the sanctions are lifted on Iran and Iranian oil.
Lowest pump price here in S.Cali yesterday... 3.49 a gallon. 3.69 down at the Chevron on the corner.
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