Historic Lows at the Pump

Historic Lows at the Pump

oilgas-pricesWhile the recent drop in gas prices is allowing consumers to hit record highs in confidence, leading to more spending and good news for restaurants, bars, and vehicle sales, the same positive effects are not shared with the energy sector. According to the Wall Street Journal, dropping oil prices are resulting in layoffs and has Wall Street’s stock and bond investors on edge. In spite of this economists say that the damages will not be greater than the benefits on the nation as a whole, most especially lower to middle income families.  Tim Duy, an economics professor at the University of Oregon said: “To the extent you’re seeing weakness, it’s very concentrated and somewhat dramatic, it’s more evident than the additional spending power that any one family is going to have, which will be spread fairly thinly, it will end up being a significant positive.” In an estimate for The Wall Street Journal it was determined that if crude-oil prices remain at $50 a barrel, it would result in per capita savings of roughly $575—or nearly $1,325 per U.S. household—on gas over the coming year.  If we look at that number historically it is estimated that 25% of that saved income will be spent within six months. Regardless of how long it lasts or where the money is spent, I think we can all agree, these record lows are welcomed.

Comments are closed.