Georgia Gas Prices
According to AAA, the average price of a gallon of unleaded gas was $1.998 in Georgia on Friday. It was $3.221 a year ago. AAA said in a news release earlier this week that the price should remain less than $3 per gallon through the end of this year.
The U.S. Energy Information Administration predicts the average national price of a gallon of regular will be $2.33 in 2015 and $2.72 in 2016.
The lowest gas prices in years are pushing consumer confidence to new highs. Like a lot of positive economic indicators these days, however, they come with some caveats.
The average price per gallon in Georgia was $1.998 on Friday, according to AAA, and this week marked the first time below the $2 barrier statewide since May 2009. Prices often rise in the spring and summer, and the government projects a nationwide average of $2.33 for 2015, rising to $2.72 in 2016.
Lower pump prices leave a little extra cash in drivers’ pockets, and some will spend it on other things. On the other hand, the recent drop could poke a hole in the domestic oil boom that has helped fuel national economic growth of late.
Some consumers find the benefits small and mostly in their minds.
“I think there is this psychological release almost that comes with lower fuel prices,” said Wendy Cross, who runs the W.O.W. food truck in Atlanta.
Cross’ truck runs on diesel fuel, prices for which are down but not as much as for gas. Cross also said she hasn’t seen cheaper prices for produce and meat for her business.
“The bottom line, it isn’t going to mean that much,” she said.
Still, the government estimates the typical household will spend about $750 less for vehicle fuel this year compared to 2014. Unlike tax refunds or work bonuses, however, that amount is sprinkled out in small doses that dilute the effect.
Gas prices have an outsized effect on consumers because they pass filling station placards every day and many buy gas every few days, said Roger Tutterow, an economist at Kennesaw State University.
“If you look at the data, it’s not uncommon that when we see oil prices move in substantial amounts, consumer sentiment moves in the opposite direction,” Tutterow said.
The stock market is often cited as a sign of an ebullient economy and populace, but many Americans don’t dabble in Wall Street. The ticker symbol they watch is at the pump.
High confidence
The latest University of Michigan consumer survey found consumer sentiment at the highest level in a decade, with “gains in employment and incomes as well as declines in gas prices (that) were cited by record numbers of consumers,” according to Surveys of Consumers chief economist Richard Curtin.
Politicans often pander on gas prices when the prices spike, with governors suspending gas taxes and presidents tapping strategic oil reserves. And they jockey to take credit when prices fall.
Sales of RVs, SUVs and boats are buoyant, though job growth and consumers’ improving finances probably trump fuel prices in causation.
The nosedive in fuel prices could redirect spending to summer road trips, retailers, restaurants and Americans’ piggy banks.
But America’s energy boom was one of the leading drivers in the nation’s economic rebound, with states such as Texas and North and South Dakota going on a job-creation tear.
With fuel prices down, energy companies are cutting back investment and slashing jobs, which could itself have ripple effects.
The drop in gas prices, Tutterow said, is “a positive thing for the (U.S.) economy. But there will be winners and losers.”
Americans are recently buying more gas and driving more with prices down. That could partly offset the financial savings, create thicker traffic jams and that isn’t great for the environment.
Global tremors
The drop in fuel prices also is a sign of global economic tremors, such as the economic slowdown in Europe and China. Oil prices have dropped, and gas prices followed, because production surged in North America and elsewhere and global demand has fallen.
But the world is often just a geopolitical crisis away from soaring oil prices.
Further, Georgia lawmakers are considering ways to raise billions in long-term revenues for roads and transit upgrades, and tax hikes on fuel are a likely source of new infrastructure cash.
The consumer sentiment may have juiced holiday shopping a bit, though there wasn’t a surge like some analysts had hoped.
Consumer spending in December actually dipped 0.9 percent on a seasonally-adjusted basis compared to a month earlier, according to the U.S. Commerce Department, but price declines in fuel actually hurt the tally.
Total sales, though, rose 4 percent in 2014 compared to 2013.
Still, energy makes up a big chunk of household and business budgets, Tutterow said, and consumer spending in other segments could increase if the fuel price decline is prolonged.
Cross, the food truck operator, noted that people are happy to save some money. A friend’s recent Facebook post, she said, showed a $5 bill and disbelief at how much gas it could now buy.
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