Gas Prices Plunge

October 15, 2008 12:07:30 AM PDT
Nationwide, gas prices dropped more than 33 cents a gallon in the past week. It's the biggest one week drop ever. The decline in price is certainly welcome news. And, the forecast is prices are likely to go lower.In Fresno, gas prices are down nearly 50 cents a gallon over the past 30 days. Economists figure for every penny a gallon cut, that's a billion dollars back in the national economy.

Don Leet, and economics professor at Fresno State University says, "If gas goes down 20 cents a gallon that's 20 billion dollars more that we'll have to put somewhere else. Very important and very helpful."

However, the decline in gas prices mirrors an overall decline in the economy. It doesn't necessarily mean consumers are going to run out and start buying SUV's again, especially because credit remains tight. "No, I don't look for a big buying spree here. I think consumers have finally learned their lesson." Leet said.

But, the lower prices might get folks traveling. The forecast is for gas prices to drop below three dollars a gallon by Thanksgiving. And thanks to lower fuel prices, airlines are expected to lower fares.

Tom Parsons of the travel site Bestfare.com says, "With fuel costs coming down, the airlines now have more wiggle room to tempt us and lure us to get on airplanes. You'll find a great deal for the holiday season."

The drop in diesel prices is making it cheaper to transport products by truck. But, because of the slow economy, it may take awhile for that to translate in lower prices for the products.

The owner of a Fresno trucking company, Jim Ganduglia says not to expect any dramatic price cuts.

"It's not gonna change prices drastically. Because everybody is in a position now where they can't move anything."

Declining energy prices are a bright spot, but they reflect the economic downturn. Other indicators, like rising unemployment and a big drop in consumer spending tend to offset the overall benefit. "For the economy as a whole, it looks like we're in a real slowdown." Leet says.

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