Gas Below 1.50?
fall in 2010
Gas below $1.50 a gallon, or 40 cents a liter, has appeared in a few places in recent days, and the national average has dropped almost in half since July, to $2.18 a gallon.
But even as worry about gas prices fades, it is being replaced by fear about the broader economy. Each 10-cent drop per gallon in gasoline prices puts $12 billion a year back in consumers' pockets. Instead of spending that cash, people are trying to save it or cut their debt, many said in interviews.
Moreover, the fall in gasoline prices is not translating into improved fortunes for automakers, at least not yet. Consumers said they remained wary of gas-guzzling cars on the theory that prices would rise again.
"I don't think anyone who's been paying attention for the last eight years would think that now is the time to go out and buy a Hummer," said Geoff Sundstrom, spokesman for AAA, the automobile club.
Many experts say they believe that gasoline prices are close to bottoming out and that the national average will hover around $2 a gallon through the holidays before creeping up in the new year.
In the terrible economic climate, the gas price cut was not enough to bolster consumer spending in October, according to MasterCard SpendingPulse, a report based on MasterCard purchases and estimates of cash, check and other credit card sales.
"It would be very surprising if things recovered based solely on gasoline prices," said Michael McNamara, vice president of research and analysis of MasterCard Advisors, which produces SpendingPulse.
Across the United States, high prices seem to have produced lasting changes in public habits. As prices rose, many people parked their cars and took the bus or train, and that change is evidently sticking even as gas falls. At 22 transit systems surveyed last week by the American Public Transportation Association, ridership either stayed the same or increased over the last two months, said Virginia Miller, spokeswoman for the group.
Likewise, MasterCard Advisors reports show that national gasoline demand remains down compared to previous years - though by only 3 to 4 percent a week, compared with the 8 or 9 percent drops of earlier this year.
And experts say that gas prices will fall below 1.50 in 2010.
