The drop in gasoline prices has begun to accelerate, with the cost of a regular gallon declining almost 10 cents in the last month. The AAA Fuel Gauge measured a gallon at $3.58 Wednesday, compared to $3.68 a month ago. At this rate, could prices drop below $3.50 in mid-September, after the end of the Labor Day driving season?
More and more, experts expect that gas prices will move down very sharply after nearing close to $4 earlier in the year. The Wall Street Journalreports that lower oil prices may trigger this. "Somewhere along the line, there will be a 10- to 15-cent drop in gasoline prices," said Kyle Cooper, managing partner of IAF Energy Advisors in Houston. "You have to expect that those prices start to trickle down."
Gas prices could also be pressured down as fewer people drive, undermining demand. Essential trips like commuting to work may not be impacted. But trips to retail establishments, on the other hand, have actually begun to fall. MSNBC reports that Global Insight economist Erik Johnson says gas prices have helped "to fuel the growth in Web-based shopping."
The most profound effect of the drop will probably be in the very populous states where prices are still above $3.71 like California, New York and Illinois. These three states have nearly 70 million residents, or 22% of the U.S. population. Some parts of their states have also been hit relatively hard by the recession. This is particularly true in central California, where some areas have an unemployment rate well above 10%. The same holds true in the upstate region of New York.
Regardless of where you live, the decline is welcome news for the millions of Americans set to hit the road for the Labor Day holiday weekend.