Gas Prices Likely Will Keep Dropping

That's what this USA Today article is suggesting. Here's the main section of the article:
"The only place they have to go is down," says Fred Rozell, gasoline analyst at the Oil Price Information Service (OPIS). "We'll be closer to $2 than $3 come Thanksgiving." Travel organization AAA foresees prices 10 cents a gallon lower by the end of next week. It reported a nationwide average of $2.84 Tuesday, the lowest since April 20.

It's good news for consumers and the economy. Continued lower prices "may act like a tax cut" and stimulate spending, says Richard DeKaser, chief economist at National City in Cleveland. He calculates that higher energy prices the first six months cut growth of consumer spending 1 percentage point.
When AAA makes gas price predictions, it's usually a reliable forecast. The other forecasts seem to be bolstered by anecdotal evidence of dropping prices at the pump. It might also signal a drop in demand caused by an economic slowdown. We'll have to see if what's causing the drop. Either way, it's welcomed.


Posted Thursday, August 31, 2006 8:17 AM

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