Would you like to put an extra $550 in your pocket this year?
That’s how much the U.S. government estimates Americans will save in gasoline costs in 2015 with the current drop in prices.
It’s hard to believe, but the national average for a gallon of gasoline was more than $1 a gallon higher at the start of 2014 than it is today, according to GasBuddy.com. That includes Tennessee prices as low as $1.69 a gallon in Ocoee, and $1.76 in Memphis.
In Warren County, gasoline has dipped below $2 a gallon.
Kidd Ford owner Terry Kidd says the lower gas prices haven’t created a run on larger vehicles, but the lower prices are certainly appreciated.
“I think people are cautiously optimistic because there’s the feeling gas prices won’t remain this low,” said Kidd. “It will take four to six months of consistently low prices for people to feel like it’s going to stay this way for awhile. But it’s certainly a help. It’s basically cut the cost of gas by a third. If you were paying $300 a month for gas, now you’re paying $200 a month. That’s definitely a positive because gas is such a big part of everybody’s life. I’ll be the first to tell you it’s nice to put $15 in the tank and actually get some gas.”
As for people looking to buy bigger vehicles because of lower gas prices, Kidd said consumers in general are much more aware of fuel economy when they purchase any type of vehicle.
“Fuel economy has gotten so much better across the board, even in SUVs” said Kidd. “I don’t think lower gas prices are going to lower anybody’s expectations of getting better fuel economy in their vehicle. We don’t need to let our guard down because preserving the environment and better fuel economy are important, regardless of the price of gas.”
Such a drop in gas prices seemed highly unlikely as 2014 began. At the end of March, the national average for gasoline was $3.53 a gallon, and it averaged $4.21 a gallon in California in late April, according to GasBuddy.com.
Continued tension in the Middle East and air strikes on ISIS targets pushed the price of crude oil to $106 a barrel in June, with some analysts predicting the price would continue climbing to $120 or $130 a barrel.
But that climb never materialized. Instead, oil prices have plummeted thanks to a surge in U.S. energy production coupled with greater production from Canada and Mexico.
By Labor Day, Americans were experiencing the lowest gas prices in four years. Behind a 33-cent drop in October, Americans celebrated Halloween with a national average of $2.99 a gallon. By Christmas, the national average was 90 cents lower than that.
Lower gas prices are expected to continue momentum for an economy that’s clearly on the rebound. Because gas prices are so visible – posted in big numbers at nearly every gas station – economists say there’s a real psychological effect to lower prices.
It’s predicted that every cent in lower gas prices adds about $1 billion to the U.S. economy because most people spend the gas savings elsewhere, according to CNN.