Taking a look at these humorous cartoons about how high gas prices were this summer, it got me thinking about how much money the fall in gas prices really affects the pocketbooks of Americans.
The global recession has caused significant demand destruction of all commodities around the world. Arguably the hardest hit has been crude oil, down significantly from it’s peak. With the fall in crude oil prices, distillate prices have come down as well. Most nobably for all of out here in radio land, GASOLINE!! I can’t speak for everyone, but at the peak, I paid $4.49 a gallon for gas. This morning when I had to fill up my tank again, I paid $1.72 per gallon. That is a savings of $2.77 per gallon!
Now here is where it get’s interesting. For every penny that gasoline falls per gallon, American consumers gain $1 billion in purchasing power. So if I were the entire country, my savings would be $277 billion! That represents a HUGE TAX CUT and pumps a ton of money back into the American economy. We can use that extra money to either pay down our credit card debt, save more money or give our kids a merry christmas. Either way, it is a silver lining in an otherwise dismal economic landscape.
Photo Credit: jackslife