Low gas prices are putting a few extra dollars in pockets
Local restaurateur Kenneth Hochstetler, stopping at the Eshals Grocery Store on Broad Street in New London before heading to Hartford late last week, remembered when it cost $80 to fill up his pickup truck, but gas prices have fallen so low today that it now takes only $60.
"That helps out a lot," said Hochstetler, owner of Kamp Dog eatery down the street. "That's an extra $40 a month, $500 a year."
Hochstetler was filling up at a full-service Sunoco station where the lowest price for gas Friday was $3.27 a gallon - $3.37 for those using credit cards - so he could have saved even more elsewhere. In fact, some stations in Connecticut last week were selling regular gas at under $3 a gallon, and the average price in the Norwich-New London area was $3.14, about two cents below the statewide average.
Connecticut hasn't seen gas prices this low since 2010, when the state averaged $3.15 a gallon during the Thanksgiving holiday. And if downward trends continue, this could be the cheapest holiday for drivers in five years, said Aaron Kupec, public affairs manager for AAA of Connecticut.
"The U.S. is producing a lot more oil domestically than it was just a few years ago," Kupec said in a phone interview, explaining why gas prices have dropped.
But OPEC, an oil cartel also known as the Organization of the Petroleum Exporting Countries, could be about to put a stop to lower oil prices as its meets Thanksgiving Day. Kupec said OPEC might decide to cut back on oil production, which would raise prices, though most analysts expect little action from the cartel as economic stagnation around the world has reduced demand for oil.
"If everything else stays the way it is now heading into the new year, we would anticipate lower peaks and deeper valleys (for oil prices in 2015), which would certainly be good news for consumers," Kupec said.
Economists said lower gas prices will put a few extra dollars in consumers' pockets - not enough so they will feel empowered to buy big-ticket items, but enough to splurge on a treat at Starbucks here and there or a few extra Christmas presents.
"The lower gas prices ... will definitely help in having a stronger holiday buying season than we ordinarily would see," said Peter Gioia, an economist for the Connecticut Business & Industry Association.
U.S. retail predictions for a 3.9 percent gain in sales this holiday season don't represent a major jump, but such an increase would be a lot better than the nation has seen in recent years, he added.
"I think we'll have happy holidays," Gioia said.
Steven Lanza, a University of Connecticut economics professor, said the drop in gas prices is noticeable to consumers - nearly $1 below the level of last year. Americans on average purchase 1,100 gallons of gas a year, meaning that if current trends continue throughout the year consumers could have an extra $1,000 to spend - or save.
"It's going to boost people's sense of having a little more disposable income," Lanza said. "It's good news, and it comes at a good time of the year."
Lanza was referring not only to the holiday season, but to the period when home heating oil is in most demand. Heating oil prices, he said, closely track the drop in gasoline costs.
Even better news economically is the psychological kick start of having lower gas prices combined with more jobs and a re-energized labor force that for the first time in a long time is on the increase in Connecticut, Lanza said.
"The trend seems to be strongly in a positive direction," he said. "This is happening at a time when people are probably feeling better about the economy than they have in a long time."
And consumers are not the only ones to benefit. Lower gas prices also reduce costs for business owners - especially those most involved in the transportation of people and goods.
Jeff Suntup, owner of Anytime Fuel Oil in New London, said he has seen a definite drop in operating costs for his trucks, the biggest of which get only 5 to 7 miles a gallon of gas. Suntup said his company purchases up to 400 gallons of gas a day to fuel his fleet of trucks, so a 10 cent reduction in price will save him $40 a day.
"It is helping," he said. "But it's not like it's a giant windfall."
Lower gas prices could help him reduce oil prices for consumers in the future, but only if the drop is sustainable over the next four to six months, he said.
According to The Associated Press, a sudden 20 percent reduction in gas prices since June has put an extra $520 in the average consumer's pockets. The money is already showing up in the bottom line of some companies such as Wal-Mart, which reported a boost in sales for the third quarter - the first quarterly increase in almost two years.
One month ago, Connecticut gas prices averaged $3.42 a gallon for regular. At its height this year around the July 4 holiday, prices were close to $4.
Despite the recent decrease, Connecticut still has the fourth-highest gas prices in America, behind only Hawaii, Alaska and New York. State taxes account for much of the higher costs, with a 25-cents-a-gallon excise tax and another 8.8 percent levy on the wholesale cost of gas up to $3, and there is also an 18.4-cents-a-gallon federal gas tax.
Nationwide late last week, regular gas was averaging $2.84 a gallon. South Carolina had the lowest average prices nationally, $2.60 a gallon.
"Oil prices could slide further," AAA spokesman Kupec said, especially if OPEC this week decides not to cut production.
Yet, while there are reports here and there of $2.99 a gallon gas in Connecticut, Kupec said he didn't expect trends would send prices dramatically lower in the state any time soon.
"I think we're going to stay above $3 (a gallon) a least for the rest of the year," Kupec said.
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