Falling gas prices can serve as stimulus

Gasoline truck driver moves a fuel hose as he makes a gasoline delivery to a gas station on June 12, 2012 in San Anselmo, Calif.

Jeremy Hobson: For economists, economic stimulus can come from Washington -- like the little bit of it we got yesterday from the Federal Reserve. For the rest of us, it can come from a lower price at the pump.

And as Marketplace's Heidi Moore reports, that's exactly what's happening right now.


Heidi Moore: If you've been filling up in even expensive states like California or Oregon, you've seen prices of less than $4 at the pump. In fact, oil prices are falling pretty sharply.

Keith McCullough: It's awesome. This is great for the economy.

That's Keith McCullough, the CEO of Hedgeye Risk Management. He says oil has been falling for around three months because of inflation in the value of a dollar.

McCullough: Dollar goes up, oil goes down.

McCullough traces it all back to the Federal Reserve. Yesterday, the Fed refused to commit to any extreme stimulus measures for the economy-- at least just yet. That has a ripple effect on commodities like oil.

McCullough: Commodities are priced in dollars. That's why we say, if you get the dollar right, you get everything else right. And to get the dollar right, you have to get Ben Bernanke's policies right.

That's why McCullough calls volatile commodity prices "Bernanke's Bubbles." But a lot of things are out of Bernanke's control -- like a European crisis and a sluggish U.S. recovery.

In New York, I'm Heidi Moore for Marketplace.

About the author

Heidi N. Moore is The Guardian's U.S. finance and economics editor. She was formerly the New York bureau chief and Wall Street correspondent for Marketplace.

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