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Fill 'Er Up
Americans Enjoying Extra Cash, Thanks to Cheap Gas

U.S. shale producers have helped to bring oil prices down, and American drivers are enjoying the fruits of those labors as they pay less for gas than they have in six years. As Bloomberg reports, Americans aren’t being shy about spending that money saved at the gas pump:

The lowest oil prices since 2009 translated into a $115 billion windfall for consumers last year, according to the American Automobile Association — about $550 per driver. Analysts say four-fifths of that cash got spent — often within a stone’s throw of the fuel pumps. Rather than buy a new sweater or a toy for the kids, motorists have spent much of the money at restaurants and bars, or on items purchased in gas stations such as cigarettes and salty snacks. […]

So far, restaurant companies have been the biggest winners, sucking in about 18 percent of the extra cash, according to a report by the JPMorgan Chase Institute, which analyzed 57 million credit and debit-card purchases. The next biggest share went to groceries, followed by entertainment. […]

“It is the lower-income groups who are eating out more frequently and pushing the sales in those categories,” said Tristano.

Financial advisors might be cringing slightly at how little of these newfound savings Americans seem to be saving, but for many families this extra cash is translating into some very concrete increases in quality of life. And of course the companies at which these drivers are spending that money will be hoping for gas prices to fall even further, in the hopes that their sales will see further increases.

Low gasoline prices come courtesy of low global crude prices, which themselves come courtesy of an oversupplied market. Producers around the world are fighting tooth and nail to protect market share, and prices don’t look likely to rebound anytime soon. Petrostates are feeling the pinch, but one thing’s for sure: American drivers won’t mind.

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  • Andrew Allison

    I (surprise) have a somewhat different take. Given the miserable performance of retailers in general (e.g., http://www.cnbc.com/2016/01/06/macys-cutting-thousands-of-jobs-in-restructuring.html) it’s far from clear that consumers are not conserving at least some of the savings.

    • JR

      News that Macy’s is closing down stores due to poor 2015 sales seem to support your take on things.

  • Fat_Man

    Don’t worry. Medical insurance premiums and deductibles will suck up all the extra money.

    • Andrew Allison

      Nah, close to 90% (and rising) of the beneficiaries (of which, in the interest of full disclosure, my wife is one) of the insurance, hospital and pharmaceutical welfare act, aka ACA are feeding from the taxpayer teat, and the deductibles are so large that they are foregoing treatment.

    • eugen savoy

      concur. but as with and third-party-payer system, ignorance (willful or otherwise) and entitlement drive costs higher regardless of any party’s ‘solution.’ to wit: 1994 redline jettison begets 2008 implosion; student loan window opens wide begets asinine education costs and debt serf millennial.

  • jeburke

    Don’t forget heating oil and gas. A few years ago, I paid as much as $4.25 a gallon for oil. Now, $2.25.

  • Jacksonian_Libertarian

    It isn’t going to help the economy much, as a malevolent Fed has stopped printing money in the middle of “Great Depression 2.0”, and has raised interest rates even though falling fuel prices means there isn’t any inflation to fight.

  • Blackbeard

    This is a disaster as clearly we need much higher prices for fossil fuels to discourage consumption and stave off the imminent climate catastrophe. Hopefully Hillary will act quickly to implement a steep carbon tax and ban fracking as we have already done here in enlightened New York.

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