Tumbling Oil Prices Give A Boost To Drivers During The Holidays
MELISSA BLOCK, HOST:
Across the U.S., drivers are spending less to fill up these days, thanks to declining oil prices. The cost of a barrel of oil has plummeted since last week when OPEC member countries decided not to cut production. World prices rebounded a little bit today - up to about $72 a barrel. But that price is still over a third less than what it was in a June. As we hear from NPR's Jeff Brady, that's helping American drivers save money just in time for the holidays.
JEFF BRADY, BYLINE: At a shopping center parking lot outside Philadelphia, Diana Paul says she commutes about an hour for work.
DIANA PAUL: My tank - I usually fill it up. It used to be 50. Now it's in the 40s. So it's approximately 5, 6-dollar difference.
BRADY: And so does that mean anything to you?
PAUL: Of course. It's more travel. I can shop more for my family this holiday season. You know, more savings altogether - yeah.
BRADY: Cheaper gas prices are most helpful to those with lower incomes and people like Ralph Ogden.
RALPH OGDEN: I'm retired, my wife's retired, and we're on fixed incomes. So every penny counts.
BRADY: Ogden says he'll likely spend the money he's saving on his grandkids. Decisions like that will help boost the U.S. economy says Amy Myers Jaffe. She's executive director of energy and sustainability at the University of California Davis. And she says you can thank one country for the most recent price drop.
AMY MYERS JAFFE: Saudi Arabia is offering a holiday gift to all Americans in the form of lower gasoline prices.
BRADY: Jaffe says Saudi Arabia could have announced it was cutting production after last week's OPEC meeting. That likely would have sent prices up. But she thinks the country wants to put financial pressure on other oil states like Iran and Russia for political reasons. And Jaffe says lower prices could benefit Saudi Arabia in another way.
JAFFE: That might stimulate the global economy which means that oil demand will not continue to fall.
BRADY: Gasoline sales in the U.S. have generally declined in recent years. Lower prices could prompt some to drive more or buy bigger cars again. Jaffe says she hopes that won't be the case. Back at the shopping center, Ginger Lane says she doesn't plan to shop or drive more just because prices are lower.
GINGER LANE: I mean it's nice. I use the same amount of gas I always did. I didn't stop driving when they were higher - no. I mean, I just think it's good that they're coming down.
BRADY: The lower prices are bad news for some oil companies in the U.S. and Canada where crude is more expensive to produce than it is in Saudi Arabia. Already, some drillers are saying they'll cut back until prices rise again. It could be awhile before that happens. AAA says the average for regular gas in the U.S. is about $2.75 a gallon - 50 cents cheaper than a year ago.
One analyst, Tom Kloza with the Oil Price Information Service, says a few states could see gas under $2 a gallon by next weekend. He says the states to watch are Oklahoma, Texas, Missouri and South Carolina. Jeff Brady, NPR News. Transcript provided by NPR, Copyright NPR.