$630 Million A Day: Now That’s An Economic Boost

Consumers across the U.S. are enjoying an early present this holiday season as falling oil prices are driving down prices at the pump and keeping more money in Americans’ wallets. According to a report in today’s Washington Post, “Every day, American motorists are saving $630 million on gasoline compared with what they paid at June prices, and they would get a $230 billion windfall if prices were to stay this low for a year. The vast majority of that will flow into the economy, with lower-income households living on tight budgets likely to use money not otherwise spent on gas to buy groceries, clothing and other staples.”

Republicans have worked hard in recent years to promote domestic energy production and strengthen America’s place as a global energy superpower. While many factors affect world oil prices, there is no doubt that the U.S. has emerged as a leader, helping to hold down global oil prices in spite of persistent turmoil in the Middle East and Africa. By working to further encourage the responsible development and use of U.S. energy resources, we can help keep America as a world energy leader and allow consumers and businesses to reap the benefits of abundant, affordable American energy. The Architecture of Abundance is a comprehensive plan to harness the benefits of our energy abundance and say #Yes2Energy. To learn more, visit: http://energycommerce.house.gov/yes2energy. 

December 2, 2014

As oil prices plunge, wide-ranging effects for consumers and the global economy

Tumbling oil prices are draining hundreds of billions of dollars from the coffers of oil-rich exporters and oil companies and injecting a much-needed boost for ailing economies in Europe and Japan — and for American consumers at the start of the peak shopping season.

The result could be one of the biggest transfers of wealth in history, potentially reshaping everything from talks over Iran’s nuclear program to the Federal Reserve’s policies to further rejuvenate the U.S. economy.

The price of oil has declined about 40 percent since its peak in mid-June and plunged last week after the Organization of the Petroleum Exporting Countries voted to continue to pump at the same rate. That continued a trend driven by a weak global economy and expanding U.S. domestic energy supplies.

The question facing investors, companies and policymakers is how low oil prices will go — and for how long. Every day, American motorists are saving $630 million on gasoline compared with what they paid at June prices, and they would get a $230 billion windfall if prices were to stay this low for a year. The vast majority of that will flow into the economy, with lower-income households living on tight budgets likely to use money not otherwise spent on gas to buy groceries, clothing and other staples.

On Monday, the average U.S. price for a gallon of regular-grade gasoline was $2.77, according to AAA, which projects that prices could drop by an additional 10 to 20 cents.

Big American companies are better off, too. Every penny the price of jet fuel declines means savings of $40 million for Delta Air Lines, the company’s chief executive said in a recent CBS interview.

“Despite the impressive recent gains in natural gas and crude oil production, the U.S. still is a net importer of energy,” William C. Dudley, president of the Federal Reserve Bank of New York, said Monday at Bernard Baruch College. “As a result, falling energy prices are beneficial for our economy and should be a strong spur to consumer spending.” …

Read the article online HERE.

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