Falling Gas Prices Are an Early Christmas Gift for the Economy

Falling Gas Prices Are an Early Christmas Gift for the EconomyAcross the U.S., the prices of a gallon of regular gasoline was $3.408 on average Tuesday, according to AAA. That's a sharp drop from the $3.662 a gallon price that prevailed a month ago. Gas prices have finally begun to reflect the falling price of oil, which is down from nearly $100 a barrel in July to less than $78 now.

Oil prices have declined primarily due to concerns that a rapid slowdown in the global economy will undermine demand. That widespread weakness should continue to put downward pressure on gas prices as oil moves through refineries, a process that takes weeks.

Premium gas has fallen, too, from $4.265 to $4.024 over the past month, and should dip below the $4 a gallon barrier soon. That's good news for owners of expensive sports cars and luxury vehicles.

The general theory is that low gas prices help stimulate the economy: As household expenses for driving fall, that money gets reassigned to other purchases, boosting overall demand. That's almost certainly true. The Department of Transportation and the Energy Information Administration report the average U.S. household purchases slightly more than 1,100 gallons of gasoline per year. With the American median household income just below $50,000 before taxes, fluctuations in the price of gas meaningfully affect the ability of consumers to spend or, alternatively, save or pay down debt.

This gas price decline couldn't come at a better time for the U.S. economy. The holiday sales season will begin within a few weeks. Many retailers count on sales in the final two months of the year for all of their annual profits. These retailers add jobs based on revenue forecasts, and many large retail firms have already done so. Their ability to keep those people employed beyond the end of the year will depend on whether shoppers fill malls and stores between now and year's end.

Low gas prices won't keep the U.S. out of a new recession -- but they'll help.


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nthereoff

Gas is still to high cost to fill car is over 50 dollars With the big saving I can now go to the dollar store to do my shopping

October 12 2011 at 7:39 PM Report abuse rate up rate down Reply
Jennie

why are we still paying over 3.00 a gal when it is in the 2.00 range??????????????????????????????

October 06 2011 at 9:19 PM Report abuse rate up rate down Reply
savemycountry911

The economy will be wonderful just before the election, then go to pot.

October 06 2011 at 8:29 PM Report abuse +3 rate up rate down Reply
kastmaster2105

Well, todays another day.....up $2.20 a barrel.....................from yesterday. up Total $7.20 in 2 days....bet ur asses they have changed their signs by 10 cents more......HELLLLLLLLLLLLLPPPPP

October 06 2011 at 3:38 PM Report abuse +2 rate up rate down Reply
agentsculley28

Pretty gas prices are going back up. :( They were 3.10 here, now they are 3.39.

October 05 2011 at 10:31 PM Report abuse rate up rate down Reply
kastmaster2105

where's ole Pres's. gas gounger team when U need them????

October 05 2011 at 10:23 PM Report abuse rate up rate down Reply
kastmaster2105

OIL $$$$ per barrel just went back up $5....go ahead U friggin speculators, stores will run out there and change their signs in 10 mintues....gas up $.10 a gallon. I hope they nail ur asses to the wall one day and QUICK. Gas should be 2.55 now..bull ****, better add a dollar where U are....77563

October 05 2011 at 10:21 PM Report abuse +1 rate up rate down Reply
davefromfwb1

Never trust a President whose lips are as black as oil. I think his lips are black from his lips bumpin together but never saying anything worth while. I bet if he powdered his face white and announced that Obama left the office cause he was a chicken $hit then the price of oil would drop to $1.68 and oil would be $38.00 per barrel.

October 05 2011 at 9:14 PM Report abuse +3 rate up rate down Reply
davefromfwb1

The only country benefiting from cheaper gas is China....with the extra money we save we buy things that are made in China. It's a no win situation. China and Saudi Arabia are our pimps.

October 05 2011 at 9:06 PM Report abuse +2 rate up rate down Reply
gizmo4257

Cramer spoke with Sen. Bernie Sanders (I., Vt.) on the role of speculators in controlling the price of oil and why the Commodity Futures Trading Commission (CFTC) has not imposed new regulations on oil futures despite being required to do so by law.
Sanders said simply that the CFTC has chosen to listen to Wall Street instead of regular people on the issue of oil futures and has ignored the law which requires tougher regulations. Sanders, along with Cramer, both called on President Obama to demand the CFTC raise margin requirements and impose limit positions in order to crack down on the rising price of oil.
Sanders said the price of oil is clearly being manipulated, yet the president was forced to open the strategic reserve to lower gas prices rather than impose new regulations. He said that there is more oil supply than two years ago, and less demand, yet the price of oil has only dipped slightly after rising precipitously earlier this year.
Sanders explained that as much as 80% of all oil futures pricing is controlled by speculators and not by demand. He said the country needs strong rules to combat this speculation. Sanders called on citizens to write the CFTC and ask why they haven't followed the law and introduced stronger rules. He said its clearly in the national interest to do so.

October 05 2011 at 8:47 PM Report abuse rate up rate down Reply