No need to pull each others’ fingers anymore!
For the first time in almost 8 months, retail gas prices have fallen below $3 a gallon in a handful of states, including parts of Missouri, Michigan and Texas. And the trend is likely to continue thanks to a sharp decline in crude-oil prices. With the national average for regular unleaded gasoline down from $3.98 in early May to now at $3.51 per gallon, last week’s plunge in oil prices could push the average to $3.25 per gallon by November, analysts say.
Economist Philip Verleger equates the price plunge to “a stimulus program for consumers,” leaving Americans with more money. In the course of over a year, a 50 cents-per-gallon drop in gasoline prices would add roughly $70 billion to the U.S. economy.
Arthur De Villar, a 48-year-old safety inspector for the Federal Aviation Administration, paid $2.96 for gasoline near his home in Manchester, Mo., a suburb of St. Louis — and he recently replaced his SUV with a four-door sedan.
With three boys at home between the ages of 11 and 14, the money De Villar saves on gas still gets spent. But it goes to the amusement park, a Cardinals baseball game or the movie theater.
“It’s far better to be able to put (the money) anywhere other than in the gas tank,” he says.
Economists caution that gasoline savings, while welcome, won’t matter much to people if the worst economic fears come to pass.
“Yes it produces some relief, your bill at the gas pump goes down, but it’s going down because there are worries that people won’t have jobs,” says James Hamilton, an economics professor at the University of California, San Diego. “The news has not been good.”
And gasoline prices remain historically high. Gasoline has averaged $3.56 this year, the highest yearly average ever. Americans have cut back driving in the face of high prices, but they are likely to spend more on gasoline in 2011 than ever before — close to $490 billion, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.
I’m not sure if we should enjoy it while it lasts or expect better things to come. But either way, cheaper is better, even if it’s temporary!Tags: economy, Exxon, fuel prices, Gas, gas prices, Mobil, University of California