America
Cheap Oil Boosts Consumers O
Extra pocket money is fueling shoppers’ confidence. BY DAVID A. PATTEN
il, it turns out, fuels many things — especially consumer confidence.
That metric reached an 11-year high
in January — great news for manufac- turers and retailers, who expect the bullish sentiments to translate into big orders, as free-spending shoppers drain inventories. It was no coincidence the uptick in consumer sentiment came just as AAA noted gas prices in some cities were flirting with the $2 a gallon mark. To find lower gas prices, you’d have to journey back to 2009. According to the Department of
Energy, the typical household will save $550 this year even if gas prices jump back to $2.60 a gallon. That’s good for the economy, but
it’s also good for individual consumers. Here are several ways the sudden drop in gas prices impacts your wallet:
AIRLINES & TRAVEL U.S. airliners drink about 20 billion
gallons of jet fuel each year, according to S&P Capital IQ. So a drop of just a few cents in the price of a gallon of aviation gas can save them hundreds of millions of dollars. Remarks CATO economist Chris
Edwards: “For anything that runs on diesel or some sort of oil product, for transportation, it will be a huge boon.” There’s a catch: Most airlines protect themselves
against swings in fuel prices by locking in future purchases of jet fuel at today’s price. And those contracts create a lag when fuel prices crash,
so it may take a few months for airline ticket prices to drop significantly. The International Air Transport Association is predict-
ing ticket prices will drop about 5 percent this year, and consumer advocates are already grousing. Other sectors
16 NEWSMAX | MARCH 2015
TRAVEL, AUTO, RETAIL PURCHASES All will see an upsurge due to dropping fuel prices.
of the travel industry — cruises to mass transportation — should experience savings as well.
AUTOMOBILES Lower gas prices usually embolden consumers to buy
more SUVs and trucks, as it becomes less painful to fill up their big fuel tanks. Some dealers report a run on full- size SUVs, and the advantages of hybrids will become less apparent — at least until the price of gas takes a U-turn and
AIRPORT/PAUL J. RICHARDS/AFP/GETTY IMAGES / CAR DEALER/ECHO/GETTY IMAGES SHOPPERS/AP IMAGES
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