You might not remember but back in 2014 we were paying a lot more for gas than we are right now. The national average price for a gallon of gas peaked in April at $3.70. That price steadily decreased for the remainder of the year and we saw a significant drop in 2015. How big of a drop? As a whole, U.S. gas prices dropped 25 percent between 2014 and 2015.
That drop made a big difference on the amount the average American family spent on gas. According to data compiled by The JPMorgan Chase Institute, middle income households spent $477 less on gas in 2015 than in 2014.
That translates to a one-percent increase in annual income for 60 percent of households, or a savings of a half a months rent or mortgage.
The savings didn’t necessarily stay in our pockets however. According to the JPMorgan Chase data, Americans used that savings on gas to spend more money in restaurants, retail, groceries and in-station purchases at gas stations.
“This savings at the pump benefited restaurants and retailers and contributed to changes in consumers’ transportation choices that we haven’t seen in five years,” said Diana Farrell, president and CEO, JPMorgan Chase Institute. “People are driving more and using transit less.”
I can personally attest to spending my gas savings inside the gas station. When prices dropped I was more likely to go into the store and buy a beverage, a snack or a lottery ticket. When gas prices were near the $4 mark, I rarely went into the gas station to purchase additional items. It was fill up, painfully, then head back on the road.
I am not alone. The numbers indicate that consumers used a whopping 24 percent of their gas savings on purchases inside the gas station. Nineteen percent of the money was spent in restaurants, 16 percent on retail, 13 percent on online retail and 11 percent on groceries. That leaves 42 percent in actual savings.
The data that the JPMorgan Chase Institute used for the analysis was taken from a million Chase customers across 23 states to see what impact lower gas prices had over a full year.
Cheaper gas prices had an even bigger impact on lower-income families. Households that earn less than $30,000 a year saved $332 in gas in 2015 with equates to a 1.4 percent bump in disposable income.
The lower gas prices did translate into commuters driving more miles year to year. After a five year decrease in gas consumption and miles driven, we saw a bump in 2015. I have seen that trend continue in 2016.
Lower gas prices, coupled with lower unemployment has bumped up our traffic volume and delays here in metro Atlanta.
The benefit of lower gas prices helps our wallets but probably hurts our traffic. Proving once and for all you can’t have your cake and eat it too.
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