Cheap gas saves Americans $1B per day
The severe economic downturn here in the US has lead to all sorts of bad news. Layoffs, business closings, and bailouts dominate the headlines, and good news can be hard to find. One of the only reasons to hold our heads high has been the unprecedented drop in gas prices. The recession has caused a decrease in oil demand, which has lead to fuel costs that dropped from $4.11 per gallon in July to $1.62 today. That's a decrease of almost $2.50 per gallon in only five months.Tom Kloza, chief oil analyst for Oil Price Information Service, says the meteoric fall of fuel prices has been so dramatic that Americans are now paying $1 billion less per day than they were in July. The extra cash in Americans' pockets is likely helping to avoid an even greater financial calamity, though even a billion a day isn't going to make the recession go away. Still, it's nice that we can go to the gas station without consulting with a financial analyst or raiding the children's college fund.
[Source: Detroit Free Press]
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Reader Comments (Page 1 of 3)
Mobius_1 11:11AM (12/28/2008)
Two weeks of this, and America would have saved enough to bail out the Detroit 3.
Two years of this, and America would have saved enough to bail out Wall Street.
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Dan Mosqueda 11:27AM (12/28/2008)
Great point. But we still need to continue down the road to independence from foreign oil. That way I don't have to live in Iraq anymore!
Kotse 11:56AM (12/28/2008)
You win some (gas prices)...you lose MORE (401k, investments, bailouts, recession, rising food prices, real estate slump,...you name it!).
Crackberry Addict 1:06PM (12/28/2008)
@ Dan Mosqueda, I'm assuming your a soldier. If you are, just wanted to say thanks!
tankd0g 6:29PM (12/28/2008)
They spent it all on SUVs.
Evotec 11:25AM (12/28/2008)
Im sure its a matter of time,that gas prices are going back to 4-5$.
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Noidor 11:28AM (12/28/2008)
This is a temporary relief, but even now I doubt it's doing much. I think most people are still curbing their spending, especially that which involves the use of credit, and definitely I'm certain they are driving less.
What's going to happen is that once all the de-leveraging occurs in commodity markets, once the dollar falls a bit more, then price of oil will skyrocket back to $100+ per barrel. The demand is still there - it'll continue to increase and supply isn't getting greater.
And it won't stop at $100 because no oil company will consider doing any sort of exploration in hard to drill areas, nor investing in new refineries, etc etc for simple reason that they'll be afraid to do so in fear of oil falling again. Which of course means that oil-rich countries are probably loving this because they know that later they'll make all their money back and then some more.
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Fatima 11:33AM (12/28/2008)
You would be a fool if you think prices will stay this low. Once the economy picks back up prices will return to ATLEAST $3 a gallon.
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compy386 12:02PM (12/28/2008)
I take it then that you're heavily invested in oil futures. Enough talk, if you think gas prices will go up, invest in it. If you're right, you'll be rich.
Fatima 1:35PM (12/28/2008)
What, do you think the demand of oil in China and India has disappeared? And OPEC will let prices stay this low? Have you been to Dubai lately? They are building a 1st world nation overnight they need oil to stay high to sustain their disgusting insane growth.
compy386 2:58PM (12/28/2008)
I've got no idea where gas prices are going to go. Sure the reasons you gave are alright, but at the same time the economy could tank further and make gas prices even lower. We could turn into the next Japan for all I know. If you really believe that prices are going up, why are you wasting time on a blog. Go out and make millions!!!
Fatima 3:17PM (12/28/2008)
Its a sunday, Stock Market is closed. I always get bored when the market is closed!
tankd0g 6:30PM (12/28/2008)
Fatima, the demand for oil in China and India has not disappeared, in fact it has not changed at all. And yet prices keep falling. Rationalize that. If oil prices ever get up to $150 a barrel again, it will be a bubble created by speculators, and it will burst. Personally I don't see that happening in the next couple of years because so many of these bottom feeders were completely wiped out when the bubble finally let go.
catfish 11:37AM (12/28/2008)
it isn't a coincidence that historically high gas prices prompted a massive recession...
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Supersoul 11:40AM (12/28/2008)
Low gasoline prices not only continue to fuel our apitite for bloatmobiles but also fuels our addiction to fossil fuels produced by nations that hate us. It's been 35 years since we got our wake-up call in the form of the first Arab Oil Embargo. How stupid are we really?
The only viable solution is to place a minmum floor on the price of a gallon of gasoline in the form of federal taxes. Only then will we move in the direction of fuel efficient and alternative fuel vehicles. Another positive result is that our automakers would likely not need to be on permanent life support.
Toughen up and suck it up, America! The handwriting is on the wall.
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Michael 12:00PM (12/28/2008)
Yes, because raising the price of gas puts more money in the customer's pocket to enable them to purchase vehicles that don't exist.
Brilliant.
John D 3:23PM (12/28/2008)
No, michael, because to most American's the question between a fuel-efficient/hybrid/alternative car and a standard model is not "is this what's best for the country" or "will this diminish my personal contribution to our dependence on foreign oil" or even "will this make me less responsible for air pollution and climate change." The only question that ever holds any weight is "which one of these choices is a better deal over the life cycle of the car." Until the price of gas is increased to reflect the true costs of US government oil subsidies (paid by income taxes), US military operations in the middle east to "stabilize" the supply chain (paid by income taxes), healthcare costs due to air pollution (soon will be paid by income taxes), and the inevitable costs involved in mitigating future environmental catastrophe, Americans will continue to make the uneducated choice.
Michael 12:39AM (12/29/2008)
John D, you have a very good point. Perhaps my perspective is skewed a bit by how a majority of people are presenting the gas tax, as if all the money it brings in is immediately going to fund the R&D for amazing alternatives. It just isn't.
the vegas style guy 11:44AM (12/28/2008)
I know higher prices are coming back but I'm driving a very small car and going back to school ,so, I'm very happy that 5 dollars will get me 1/2 tank. I understand that low prices mean people forget about buying smaller cars and conserving which will start the whole process again, but, I needed this break.
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Michael 12:05PM (12/28/2008)
Hah, yeah. Right now $13.50 gets me at LEAST 270 miles.