Will lower gas prices mean more consumer spending?
Gasoline prices have dropped so much this year, that many are speculating about their impact on other areas of the economy.
We are seeing the cheapest pump prices in four years this fall. The national average pump price on Friday was $2.95 a gallon. One year ago, the national average was $3.22. Cheaper crude oil prices driven by continued high domestic production - along with the usual lower demand that is seen in the fall months - is pushing down prices. On Monday, the average price for regular gasoline in New Jersey was $2.76, according to newjerseygasprices.com.
But will the lower prices put enough money in the hands of consumers to prompt them to spend it elsewhere, especially for the holidays? Chief Oil Analyst Tom Kloza of the Oil Price Information Service says, "I think the answer is mixed."
Economists have suggested retailers may start to see some of the money that drivers formerly paid for gas showing up in their stores during a time of year when they need that increase in spending by customers. Kloza, however, says it's still too soon to say whether other businesses will reap the benefits.
"So far, it's premature to say that it's going to lift other retail sales or restaurants and so forth," Kloza said. He jokingly suggests that the immediate effect of drivers seeing some extra cash in their hands at gas station convenience stores might be an increase in the sale of beef jerky or coffee.
Kloza said along with lower gas prices comes lower diesel fuel costs. Diesel powers trucks and trains, "and that should, in theory, work its way through the economy and lower prices for food and everything that gets shipped across the country by truck and by rail."
Jet fuel is as low in price as it's been in four years, but Kloza said no one expects to see cheaper air fares anytime soon.
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