Prices at the pump sometime head in the exact opposite of the trajectory forecast by analysts. But this autumn, gas prices are steadily plummeting, just as predicted, recently hitting a low for the year.
Drivers should hope that analysts keep getting it right, as forecasts call for continued decreases in gas prices in the months ahead. According to the AAA’s Fuel Gauge Report, the national average for a gallon of regular stood at $3.275 as of Friday. That’s nearly 25¢ cheaper than the average of a year ago at this time, and it’s just under the previous low for 2013, measured at $3.29 in early January.
It’s expected that prices will keep falling as the end of 2013 grows nearer. AAA is forecasting a national average of $3.10 by year’s end, which would be the lowest price since February 2011.
Sub-$3 gas has already been popping up around the country at more and more gas stations. About 10 days ago, USA Today reported that gas for under $3 per gallon had already appeared in 24 states. As of Friday, only one state was averaging under $3 (Missouri), but seven states mostly in the heartland are under $3.10, and AAA anticipates that the average in as many as ten states could dip below $3 by Christmas.
Speaking of which, some say that gas prices could have a significant impact on the all-important holiday shopping period. Thanks to the federal shutdown and general unease about the economy, among other factors, retailers are expected to have a lackluster holiday season. But the hope is that lower prices at the pump will boost holiday spending. Cheaper gas prices help workers hang onto more of their money—at least, that is, until they spend it online or at the mall while rounding up holiday purchases or perhaps engaging in some “self-gifting.”
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“We all benefit — from lower gas prices and job creation,” Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch in a story noting America’s rising crude supplies and the likelihood of $3 gas making more appearances throughout the U.S. “We will be less impacted by problems in the Middle East and it will make other countries less likely to use oil as a political weapon.”
However, not everyone is sold on the idea that cheaper gas prices will directly translate into increased consumer spending and the return of boom times. In a period of flat wages, frustration with the government, and low confidence in the economy, “consumers are grumpy,” Tom Kloza, chief oil analyst with the gas price-tracking site Gas Buddy, told CNBC. “They’re not gonna drive more,” even if gas prices drop by another 10% or so. “They’re not gonna take more vacations.”
They may not suddenly decide to go hog wild on holiday purchases either.