When planning your summer vacation this year, you may not want to discount a road trip. Gasoline prices are falling and are predicted to keep falling, according to the Associated Press.
In the last seven weeks, the average retail price of gasoline in the U.S. has fallen 38 cents, to $3.60 a gallon. Another 25-cent drop is expected by mid-July.
In early May, prices began approaching $4, with many drivers beginning to worry that prices would hit $5 this summer. Since then, oil prices have collapsed as a result of slowing economic growth in developed countries, as well as weaker demand for oil and gas paired with this week's decision by the U.S. government to release 60 million barrels of oil from strategic reserves. The falling prices will benefit consumers by leaving them will more expendable income, allowing them to feel more confident spending on travel, shopping, dining and entertainment, according to economists.
"You can go out and have a good time, and have a little money left in your pocket," Ron Meyers, 51, a handyman from Little Rock, Arkansas, told the Associated Press.
The price drop only saves the typical consumer $12.50 per month, but has a tremendous effect on the economy as a whole though, as a result of the effects on the psychology of consumers.
"They'll be a little bit more liberal about their consumption instead of just having a barbeque in their back yard," Naveen Agarwal, the CEO of Pricelock, said.
"We actually budgeted $5 a gallon," Mark Dykstra, who is planning a summer vacation with his family, said, discussing his upcoming road trip to Chicago.
Gasoline rose in price for the first five months of the year, resulting from growing economies in developing countries, such as China and other countries in Asia, which burn more gasoline. However, turmoil in the Middle East prevented oil from reaching the intended markets and scared oil traders into bidding higher prices, causing oil to peak at $114 per barrel in April.
Oil is currently at $91 per barrel, a two percent drop since last week.
Energy economists and Wall Street investment bankers caution that the price is likely to rise above $100 a barrel again next year. Struggles to meet production demands, natural disasters and additional unrest in the Middle East could also cause prices to rise again.
"If you're asking whether gasoline could be $3.50 or higher forever, the answer is yes," Andrew Lipow, an oil analyst, said. "People will have to make some adjustments."
For many commuters, the longer-term implications of oil prices are more important than a temporary seasonal price drop.
"It almost doesn't matter because I know [prices] are going to go back up again," Adzi Vokhiwa, who commutes 60 miles a day to her job, said.
This article is copyrighted by Travelers Today, the travel news leader
