Across 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.
http://www.dailyfinance.com/2011/10/05/falling-gas-prices-are-an-early-christmas-gift-for-the-economy/