The falling price of gasoline should be giving the US economy a burst of energy. But economists say consumers are too worried about their jobs this summer to notice they have more money in their pockets after filling their tanks.
Still, it’s not too late for the fuel price dip to factor into the American psyche. Cheaper gasoline makes it less expensive to hit the malls, visit relatives, or plan a weekend at the beach.
On Thursday, according to national auto club AAA, regular unleaded had dropped to $2.58 a gallon – 5 cents less compared with a week ago and down almost 2 cents a gallon overnight.
If gasoline prices remain at their current levels – or fall some more – it could amount to a significant amount of savings compared with last year.
Motorists are saving about $1,800 on their yearly fuel bills, based on a current average annual price of $2.13 a gallon and compared with the average price last year of $3.25 a gallon, calculates John Felmy, chief economist at the American Petroleum Institute in Washington.
“[W]hen you spend money on gasoline, you can’t spend it on other things,” says Mr. Felmy.
And prices may continue to fall. The price of crude oil has fallen from a high of $72.68 a barrel on June 30 to less than $60 a barrel Thursday.
“We’ve got a little bit more to go,” says Mike Fitzpatrick of MF Global, a commodities brokerage house. He can envision the price of oil bottoming out in the range of $48 to $52 a barrel.
“Demand is just not there,” he says.
So far, the price of crude oil is down about 30 cents a gallon, estimates Felmy, while the price of gasoline is down 11 cents a gallon from late June.
But some economists don’t think this will be enough to get more than a yawn out of consumers.
“There are just too many other factors at play, so the impact will be minimal,” says Ms. Franco.
A year ago, Franco says, lower prices would have had a bigger impact. But with the recession, consumers are now more concerned about the value of their homes, their stocks and bonds, and whether they can get credit.
“Consumers have become very cautious,” she says.
Still, if gasoline prices were rising, it would be worse, says David Goldstein, vice president of marketing and business at Easysale, which operates a fleet of trucks that pick up items in the Dallas area that people want to resell on eBay. “When gasoline gets to $3 a gallon, that’s the point when people feel pain and cut down on their driving,” he says.
At that price point, he gets more calls from individuals who decide not to drive to one of his centers but ask for his free pickup service.
Though fuel prices are down, Mr. Goldstein says his costs are rising because of the bad economy – more people want to sell personal possessions. He says he has gone from one part-time truck to three full-time trucks.
“Some of our trucks are putting on a couple of hundred miles a day,” he says. “So even though the price of fuel is down, we’re using more of it.”
Follow us on Twitter.