America just got a $100-a-month raise
Oil and Energy
A Georgia gas station owner took a $12,000 hit on July 4th when he lowered the prices at the pump. Ravi Patel tells CNN’s Ana Cabrera what prompted his decision to give back.
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‘Any savings is a blessing’: Gas station owner on dropping prices for a few hours
The European Union has agreed to voluntarily ration its natural gas this winter to prevent a severe supply shock as the war between Russia and Ukraine continues. CNN’s Clare Sebastian has more on what the agreement means for certain countries.
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EU countries agree to reduce gas consumption to prep for winter
Fatih Birol, the director of the International Energy Agency, gives a stark warning over Europe’s energy supplies due to the Russian invasion of Ukraine and urges the continent’s leaders to take further action to cut gas consumption before winter.
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IEA director says Europe needs to lower gas consumption to prepare for winter
Nord Stream 1, the biggest single pipeline supplying Europe with Russian gas, has resumed operation after a planned maintenance. CNN’s Clare Sebastian explains why the pipeline is so important.
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Nord Stream 1 makes Europe more reliant on Russian gas. Here’s why
French Finance Minister Bruno Le Maire tells CNN’s Becky Anderson about the energy deal France signed with the UAE and the advice he has for Europe to prepare for Russia cutting off its gas supply to the rest of the continent.
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French finance minister says country prepping for cutoff of Russian gas supply
CNN’s Christiane Amanpour speaks with Hungarian Foreign Minister Péter Szijjártó about the reasoning behind Hungary’s purchase of Russian energy despite the war in Ukraine and why he says it isn’t a political statement.
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Record setting gas prices show no signs of slowing down, CNN’s Matt Egan explains why global issues are continuing to cause pain at the pump.
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Three reasons gas prices are expected to stay high
CNN’s Christine Romans breaks down President Joe Biden’s letter to Shell urging them to ramp up supply and warning that “historically high” profit margins are unacceptable at a time when Americans continue to see soaring prices at the gas pump.
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President Joe Biden continues to promise the nation that fighting inflation is his “top economic priority” while also blaming the continued high prices on Russia’s unprovoked invasion of Ukraine. CNN’s Tom Foreman reviews this claim.
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Phoenix gas station owner Jaswiendre Singh is selling gas for less than the purchase price to “give a break to the customer and my community.” CNN affiliate KTVK/KPHO reports.
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Gas prices rise and fall but where is your money actually going? CNN’s Jon Sarlin breaks down what goes in every cent at the pump.
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Mathias Cormann, Secretary-General of the Organization for Economic Co-operation and Development, speaks with CNN’s Julia Chatterley about the group’s latest report that projects the economic effects of Russia’s invasion of Ukraine and high inflation.
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The average national gas price continues to rise amid inflation. Gas prices and the overall US economic forecast could shed light on the midterm election results. CNN’s Harry Enten reports.
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CNN spoke with David Bennett, Repair Systems Manager at AAA, about ways all of us can try to be a little more fuel efficient while gas prices are at record highs.
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Andy Lipow, President of Lipow Oil Associates, shares what phasing out Russian crude oil sales in the European Union and OPEC+ means for global gas demand.
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The European Union agreement bans 2/3 of Russian oil imports immediately and will block 90% by the end of the year. CNN’s Anna Stewart breaks down the deal which includes an exemption for some countries.
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New York CNN Business —
Next time you stop at a gas station, think of it as a $100-a-month tax cut. Or a maybe $100-a-month raise.
The steady drop in gas prices over the last few months has turned into an unexpected form of economic stimulus, coming at a time when the Federal Reserve is trying to cool the economy and battle rising prices with higher interest rates.
Since hitting a record of $5.02 a gallon on June 14, the national average price for regular gas is down $1.10, or 22%, to $3.92, according to AAA. That average has now fallen for 67 consecutive days.
Since the typical US household uses about 90 gallons of gas a month, the $1.10 drop in prices equals a savings of $98.82.
The impact of the extra cash could be a substantial boost to an economy that is showing signs of consumers pulling back on purchasing nonessential items, such as clothing, electronics and household goods.
Major retailers including Walmart, Target (TGT), Best Buy (BBY) and Gap (GPS) are cutting prices on those items after consumers shifted to more spending on food and gas. And that pullback in consumer spending is one reason why many observers are now forecasting a recession, since consumer spending accounts for nearly three-quarters of US economic activity.
But lower gas prices could help revive spending on those nonessentials.
A $1 decrease in gas prices equals about $125 billion a year in savings for US households, or more than $10 billion a month, said Mark Zandi, chief economist for Moody’s Analytics. That’s equal to about a half of a percentage point on the nation’s gross domestic product, the broadest measure of economic activity.
“And that’s just a direct benefit. Lower diesel prices bring down the cost of transportation for all goods, including food,” he said. “If you add in the indirect benefits, it’s real money.”
The impact on the broader economy can go beyond just straight dollars and cents, Zandi said. No economic metric is more prevalent in public consciousness than the cost of gasoline, with signs on so many street corners advertising those prices.
“They play such a central role in people’s psyches,” he said. “It affects confidence.”
Zandi still thinks there’s about a 50-50 chance the US economy falls into a recession within the next year to 18 months, but his expectations for when the downturn might hit has been pushed back because of falling gas prices. Back in June, when gas was $5 a gallon and still rising, Zandi expected a recession to come within six to nine months.
Executives at both Walmart and Target said on calls with investors this week that they’re seeing signs the cheaper gas is boosting consumer demand for nonessential goods. That is one of the reasons they’re not prepping for a recession quite yet.
“If you told us that fuel was going to continue to tick down and that food inflation was going to moderate, that influences how we think about general merchandise inventory,” said Walmart CEO Doug McMillion on a call with investors Tuesday.
One thing consumers clearly aren’t spending their gas savings on is buying extra gas to drive more. Gas consumption fell very little as gas prices shot up, and it’s increased very little as prices have come down, said Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA.
That’s because gasoline is what economists refer to as an inelastic good, one where price has relatively little impact on the amount purchased — unlike the aforementioned nonessential goods.
“I don’t know what the consumer is spending the savings on. I have a hunch it’s staples, normal things,” Kloza said. “But we’re not getting a rush of additional demand for gasoline.”
The national average is somewhat inflated by states with high prices, such as California, where the average is still $5.33 a gallon. The price there is also down more than a dollar a gallon since the peak.
The median US price stood at $3.76 per gallon as of Thursday, meaning half of the gas stations in the nation are charging less than that. In fact, 28% of the 130,000 gas stations tracked by OPIS are now charging less than $3.50 a gallon.
And the slide in prices shows no signs of letting up for the time being.
Futures contracts for wholesale gas and oil suggest that the national average could soon fall below $3.53. That’s where prices stood when Russia invaded Ukraine in February, sparking the spike in oil prices. Wide swaths of the country could even see gas fall below $3 a gallon by the end of the year, even if the national average doesn’t get that low, based on futures contracts for November and December.
Source: https://www.cnn.com/2022/08/19/energy/gas-prices-savings/index.html
