Saving 7 cents on a gallon of gas sounds like small change compared with $200 off the price of a flat-screen TV. But drivers will take it this holiday season.
The average price for a gallon of gas has fallen to $3.31 from $3.38 in just a week. The discount is an even heftier 20 cents a gallon compared with two months ago. In fact, shoppers driving from store to store on the first weekend of the holiday shopping season are paying some of the lowest prices for gas since late winter.
Even with the recent declines, however, the price of gas is 44 cents a gallon higher than on Black Friday a year ago. Tom Kloza, chief oil analysts at Oil Price Information Service, says Americans are on track to spend $488 billion on gas this year. That will eclipse the record set in 2008 by $40 billion. OPIS said last week that U.S. households have spent 8.4 percent of their income on gasoline this year, up from 6.7 percent in 2010 and 7.9 percent in 2008.
That may be one reason that malls are bustling this year with shoppers looking marked down cashmere sweaters, videogame consoles, tablet computers and flat-screen televisions. Kloza estimates that, at current demand, for every 10 cent decline in the price of gas, Americans save a total of $36 million to spend elsewhere. Retailers hope shoppers reinvest at least part of their recent savings in gifts for friends and family.
Kloza says current demand for gas in the U.S. remains "extraordinarily poor." That's the main reason why gas prices are dropping even though oil has risen about $17 a barrel, or 21 percent, in the last two months.
Oil rose Friday, but was down slightly for the week. The benchmark for crude oil in the U.S. rose 60 cents to $96.77. It dropped $1.84 on Wednesday, before markets in the U.S. were closed for the Thanksgiving holiday.
In London, Brent crude for January delivery fell $1.54 to $105.76 a barrel on the ICE Futures exchange.
In other Nymex trading, heating oil dropped 3.1 cents to $2.94 per gallon and gasoline futures lost 6.63 cents to $2.4542 per gallon. Natural gas added 5.7 cents to $3.665 per 1,000 cubic feet.
The national average for gasoline peaked just below $4 a gallon in May. Kloza says there are now 23 states where drivers can find gas below $3 per gallon. He cautions drivers to enjoy the relatively cheap prices while they can.
Gas prices tend to bottom out in mid-winter, and then begin to climb through the spring. By Kloza's calculations, if prices bottom out at $3.10 to $3.20 a gallon then, based on historical trends, drivers could see gas ranging from $3.75 to as high as $4.50 in the spring.
"The trend on Black Friday will be different from what you see on Good Friday," he says.