Falling gas prices have stuffed Americans’ stockings with a little extra holiday cash.
Lower prices means the top 20 percent of the United States income bracket will save $814 at the pump over the course of the year, according to a new analysis from Wells Fargo and the Commerce Department. The bottom 20 percent of would save $246.
Prices for Brent, an international benchmark, have fallen from over $100 per barrel in July to $61.69 on Thursday due in part to oversupply from surging U.S. output and a decision by the Organization of Petroleum Exporting Countries to maintain production levels. The low prices have roiled financial markets on worries of slow global demand and growth.
But in the short term, lower prices have provided a mini-stimulus for the U.S. The U.S. Energy Information Administration, a federal statistics arm, expects gas prices remain low a while yet, averaging $2.60 per gallon through next year.
U.S. drivers benefit more than people in other oil-producing nations because the economy is far more diversified. In Saudi Arabia, for example, oil revenues account for 90 percent of the Kingdom’s budget; in Russia, oil revenues fund more than half the budget.
Plummeting oil prices aren’t good for U.S. producers in high-cost shale energy regions that have led the U.S. boom. Many in matured shale formations like the Bakken in North Dakota and Permian in Texas can now withstand an oil price of between $40 and $50 per barrel. But they’ll have hard decisions to make if prices remain suppressed next year.
While the U.S. is now the world’s second-biggest oil producer at about 9.1 million barrels per day, it still consumes more than twice that everyday. But cars are also becoming more fuel efficient, helping curb how much gas motorists buy.
