Weak global economic growth is producing one silver lining for U.S. consumers–and potentially for Barack Obama. The gasoline price spike that had Republicans so excited earlier this year has abated, and forecasters are now saying we could see an average pump price of as low as $3.00 by the autumn, says Gary Strauss at USAToday:
Nationally, regular gasoline averages $3.47 a gallon, down 47 cents from this year’s high in April and well below the $5-a-gallon fears fanned earlier this year by energy speculators, Middle East tensions and oil refinery glitches that crimped supplies.
Those issues appear to be over, at least for now. Thursday, benchmark West Texas Intermediate crude oil fell 4% to $78.20 a barrel, the lowest price since early October and off 20% year-to-date. Coupled with slumping wholesale gasoline contracts for fall delivery, “the market is suggesting gas below $3 by Halloween, and certainly by Thanksgiving,” says Tom Kloza of the Oil Price Information Service.
With production up, oil inventories at 21-year highs and tepid consumer demand, gas prices have fallen for 11 weeks. They’re expected to drop more sharply after the peak summer driving season…
The expected slump in gas prices could have far-ranging impact, from consumer spending to the presidential elections, where debate over the swift price run-up early this year dominated much of the debate over which political party and energy policy could keep a lid on prices. Now, economists say plunging prices could provide a bit of a floor on the sputtering economy.
“You’re talking about roughly $114 billion in extra consumer spending power, and that’s a big deal if overall consumer spending is up 2% to 2.5% this year,” says Nigel Gault, chief U.S. economist at economic forecasters IHS Global Insight.
That’s all to the good. If, of course, our Teutonic friends plunge us all into a major global recession, energy prices could fall even more, but no one much would care.