Gasoline prices nationwide have fallen to the same level as in March 2009, at $1.99 a gallon, according to AAA. At that time, the U.S.economy was still in the throes of the Great Recession, and gas prices had fallen after global economic activity declined sharply, leaving a glut of crude oil on world markets.
This time around, crude oil prices are falling because of a glut in supply, plus the slowdown in China and other emerging markets, and as renewable energy replaces some demand for fossil fuels. But the U.S. economy is in expansion mode now. AAA estimates that the lower price of gasoline throughout 2015, compared to 2014, has saved Americans $115 billion, or approximately $550 for every licensed driver. Gasoline is now 41 cents a gallon cheaper than in late December 2014, according to AAA spokesman Michael Green.
Some consumers are feeling more flush than others, with the money they’re saving when they fill the tank.
“I spend a little bit more on expenditures like going out to dinner,” said Jimi Gutschwager, who operates a pressure-washing machine at commercial locations in Portland, Oregon. “Or just on things I might look at and go ‘No, I won’t do it.’ I might be more apt to do it with gas staying lower.”
But economists haven’t seen a significant uptick in overall consumer spending — or a boost to retailers — from the gas-price windfall so far. The savings rate has improved, and people continue to pay down debt, both of which may be fueled in part by American consumers’ gasoline savings.
Consumers’ income level, meanwhile, is likely to determine how they use the money they've been saving on gasoline, according to finance professor Meir Statman at Santa Clara University.
“For people with higher incomes — $500 [spread] over a year is not something they necessarily notice,” Statman said.
Statman said low-income workers who live paycheck-to-paycheck will notice the savings immediately in their monthly budget, and they're likely to shift the extra money immediately to cover other necessities that are rising in cost, including rent, medical care and car insurance.
And for the broad middle class, said consumer psychologist Kit Yarrow at Golden Gate University, gasoline savings represent “a little extra spending money. But it’s not really changing their budgets as much as you might think.”
Americans are spending more on gas-guzzlers as gas prices fall. This year, SUV and pickup-truck sales have risen by double digits.