U.S. motorists will have more to spend at the malls this holiday season as gasoline pump prices drop near $2 a gallon at the end of the year.
Gasoline has reversed a 38 percent jump in the first half of 2015. Prices, already the cheapest for early September since 2004, will drop another 41 cents by December to about $2.03, the Energy Information Administration said in its monthly Short-Term Energy Outlook. That would be down 17 percent from the $2.437 reported by the agency Monday.
Gasoline over the four-day Labor Day holiday weekend was almost a $1 cheaper this year compared to last year, the lowest price in more than a decade, translating to a cumulative savings for U.S. motorists of about $1.4 billion, according to GasBuddy.com, which tracks gasoline prices.
“This is a powerful stimulus putting tangible money in consumers’ pockets,” said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. “Retail sales for back-to-school, Halloween and the holiday season should be strong as a result. The other major benefit is that consumer confidence gets a boost whenever gasoline prices near $2 a gallon.”
Gasoline prices usually fall after the end of the summer months when demand peaks as Americans take to the highways for vacations. This year the decline should be the biggest since the last recession.
Retail gasoline in the U.S. fell 1.1 cent to average $2.369 a gallon Wednesday, the lowest since February, data compiled by Heathrow, Florida-based AAA show.