U.S. Consumers See Upside of Falling Energy Prices

21-Sep-2015

The markets are heaving over fears of a China-fueled global slowdown, but for American consumers there’s good news here: They will be paying less as a percentage of disposable income for their energy than they did in 1960.


This year, American households are expected to pay an estimated $700 less on average for energy expenditures than in 2014—a windfall that is expected to last through 2016, according to economists at the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy. “We’re forecasting the average retail price of gasoline will be $2.11 a gallon in the last quarter of this year,” says Timothy Hess, with the EIA’s petroleum market analysis team. “And gasoline prices are expected to stay below $3 for all of 2016.”

After that, the market is likely to rebalance and prices will firm up, says his colleague, Vipin Arora, from the EIA’s macroeconomic team. All of which means Americans will get some much-needed relief for roughly one year. “You don’t pay so much for gas, so you buy a TV,” Arora says. “And that adds to disposable income and consumption, which represents about 70 percent of the U.S. economy. When consumers have more income available to them, they spend more, and companies hire more people to meet rising demand.” (by  LEAH MCGRATH GOODMAN. Newsweek)

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