Do not be afraid! I bring you glad economic tidings: gas prices are falling and will continue to fall, providing a boon to Americans this holiday season. Media coverage of gas prices tends to focus on traveling costs, but the positive effects of falling prices reach much farther. Decreased prices can help spur an economic recovery and even help people have a more positive outlook on their economic prospects moving forward.
The national average price for a gallon of gas has fallen more than 86 cents since the summer high, finally dipping below $3 a gallon in November for the first time in four years. The national average is now $2.78 a gallon. That’s the lowest price since 2010.
According to Bloomberg News, lower fuel prices will free up as much as $60 billion over the next year, and this will “do double duty as a source of extra cash and a psychological lift that may push consumer confidence to multiyear highs.”
Lower gas prices help boost consumer confidence – even when the difference is as little as just 1 cent. The U.S. consumer price index tends to rise when gas prices rise and fall when they fall. The savings generated by falling gas prices mean more purchases and a boost to the economy as many families head into another difficult economic holiday season.
Basic social science tells us that when economies are strong and growing, families are stronger and more secure. An expanding economy helps parents find work; this leads to more emotional satisfaction and upward mobility. Kids in high school or even out of college can begin to get a foothold on the American Dream – something that has been elusive in the last few years.
Business gets a jump start too, which directly helps working families. The retail industry gets a boost when gas prices go down as more people travel to brick-and-mortar stores and malls. More business also benefits the retail industry’s employees, especially part-time workers whose hours were cut after President Obama’s healthcare law took effect. Lower gas prices can give those struggling to make ends meet on part-time jobs an added infusion of cash at a much-needed time.
And those lower prices can help them feed their families, because energy costs play a crucial role in the food industry as well. According to the U.S. Department of Agriculture, for every dollar we spend on food, 7 cents is tied to the cost of energy. When energy prices go down, so does the price of food.
And yes, lower gas prices make travel easier; this means more opportunity for work and community engagement. Out-of-work people can better afford to get to and from job interviews. Carpools, field trips, and family vacations increase when oil costs go down. This Thanksgiving, there was an upsurge in people traveling home, based largely on dipping prices at the pump. Gas prices affect more then just economies; they can affect the dynamics of families as well.
Unfortunately, many on the left bah-humbug low energy prices, seeing them as an obstacle to achieving misguided environmental goals. Those who sneer at lower gas prices would prefer to see high prices for traditional forms of energy so that expensive alternatives like solar, wind and bio-fuels become more palatable, regardless of the impact on American families.
Adding insult to injury, our tax dollars are currently subsidizing those “alternatives” regardless of whether Americans want them or whether they effectively lower costs. Even President Obama admitted that his policies would make traditional energy prices “skyrocket.” I don’t know many working families that budget “skyrocketing” energy costs as part of their plan to get by day-to-day.
The current decline in prices is the fruit of increased domestic drilling and exploration launched 10 years ago despite staunch opposition. As Americans, we have a moral and economic obligation to keep the price of gas low and to support policies that facilitate more oil production. And for those that continue to fight against this? A healthy dose of coal in their stocking would serve more than one purpose this holiday season.
Jennifer Stefano is the vice president of American for Prosperity, the nation’s largest grassroots advocate for economic freedom.