Cheaper Gasoline Prices Not Leading to Higher Spending

Current gasoline prices are cheaper this year, yet they are not leading to a huge increase in consumer spending according to a poll by Bankrate.com.

Around 80 percent of the 1,000 individuals polled by Bankrate said that they have not increased their spending as a response to declining gasoline prices today.

The prices at the pump continually increased for 34 consecutive days at the start of the year, then dropped through most parts of March and April. Since then, they have once again increased a little bit. But gasoline prices right now are still lower compared to last year. The most recent average price of unleaded gas is $3.62 per gallon, according to AAA. That rate is almost 10 cents below last year’s price during the same period.

The currently low prices of gasoline are being welcomed by economists as unintentional stimulus. A lot of people have said that lower gasoline may lessen the impact of the higher salary taxes that started at the beginning of the year.

However, gasoline prices may not have dropped enough to compensate for the decline in net pay, according to Greg McBride, the senior financial analyst of Bankrate.

In the last two years, studies conducted by Bankrate showed that the majority of Americans reduced discretionary buying because of increasing prices at the pump.

According to Mid-Atlantic AAA, motorists may expect to see lower prices during the Memorial Day Weekend, and the price reduction won’t end there.

AAA said that prices for the summer may be the cheapest since the recession ended.

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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