Good news! You might not have to bleed your wallet at the pump to get from A to B this summer after all. A recent drop in the price of oil has the government slashing their predictions for gas prices this summer.
On Tuesday, the fed dropped their forecast for summer gas prices from the predicted $3.95 to $3.79 a gallon – lower than 2008′s record average of $3.80. The lowered forecast could be good news for the economy, as high gas prices have been blamed by some economists for mediocre consumer spending and the loss of 35,000 retail jobs in February and March. Some analysts were predicting $5 gas this summer, which is more than 2008′s record high of $4.11 per gallon, according to MSNBC.
“It’s almost like a tax cut,” said Jared Bernstein, a senior fellow Center for Budget and Policy Priorities. The price of crude has dropped roughly $8 a barrel since April, which is considered to be the beginning of the peak driving season, lasting until September. In big numbers, the revised prediction means we’ll spend $10.7 billion less overall for gas this year.
Lower gas prices is good news for Obama’s re-election hopes as well. The political implications are pretty astounding, considering the president usually gets blamed for gas prices, and it’s an issue that we as a people feel very incendiary about. “To not have gas prices nipping at your heels in an election is obviously favorable to the incumbent,” said Bernstein, who used to an economic adviser to Joe Biden.
The president isn’t out of the woods yet though. One reason oil prices have dropped is the sluggish economy, and yet another disappointing jobs report last week. European recession is an issue too.
Still, lower gas prices are a good thing for we the consumers. The Energy Information Administration’s predictions have gas floating around $3.71 per gallon for the rest of 2012, and down to $3.67 for next year. Not ideal, but good news nonetheless. It means we’ll get to keep a few bucks every time we fill up, which means we might be more apt to drive around a little more. That does matter – MasterCard SpendingPulse said Tuesday that average gasoline demand in the U.S. fell 6.1% last week.
That means we’ve been purchasing less and less gasoline every week… for a whole year.