As a result of lower crude-oil prices, gasoline prices have started to retreat. That could be good news for consumers who are still sweating at the pump.
The average price of a gallon of regular unleaded, nationwide, has fallen to $3.62 from a week-ago price of $3.703, according to the AAA Daily Fuel Gauge Report. That's a drop of 2.3%, which may not seem like much. But if the rate of decline continues for the balance of August, regular gas prices could drop below $3.50 per gallon.
It will be surprising if prices do not fall sharply after Labor Day, the traditional end of the summer holiday season. And that is the time consumers should focus on, now barely a month away.
Oil Prices to Remain Low
Aside from the coming lower demand, gas prices should be dropping in the coming months because of the recent drops in crude oil. Gas prices usually lag oil prices as crude oil makes it through the refinery and transportation system.
The price of West Texas Intermediate crude oil fell to $80 last week, down from $100 in July, after lurking below $90 all month. There are a number of reasons to believe that oil prices will stay relatively low, at least by the standards of the last 12 months. The economies of the U.S., Japan, the U.K. and many other European nations have either slowed or have been thrown into reverse.
Economists have started to say that the drop in oil, even if it's caused by a slowing economy, could alter consumer behavior for the better -- at least from the standpoint of the economy. Households with budgets severely pressured by the cost of driving their cars will get some relief. That, in turn, could boost consumer spending, Unless, of course, the trouble in the rest of the economy increases consumer frugality.