What Does the Drop in Gas Prices Mean for the Economy?
October 30, 2014
Drivers have been seeing lower prices at the pump over the last few weeks, with gas prices having fallen by 30 cents over the last month. Today, the average price sits above $3.00 per gallon. Writing for the Washington Examiner, Joseph Lawler says the drop will have benefits for the American economy overall.
When gas prices fall, consumers benefit:
- Just a one-cent drop in the price of gas saves consumers $1.4 billion during a year.
- Businesses that rely on transportation (and, therefore, gas) also benefit from the price drop, and prices of their goods fall.
- The average household will have an extra $700 this year, thanks to the drop in oil prices over the last month.
Lawler notes that gas prices are not the only thing dropping, as commodities across the globe have seen a fall in prices recently. According to economists, the price drop is due to fears of slow growth in Europe. While that is bad news, Lawler says falling gas prices will likely produce a net benefit for American consumers.
Source: Joseph Lawler, "Falling gas prices to provide mini-stimulus," Washington Examiner, October 29, 2014.
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