US petrol prices drop below $4
Fuel prices have fallen so quickly that the average price for a gallon of regular is below $4 in every one of the Continental United States. This figure was barely imaginable several months ago, when $4 per gallon hit California, New York and several other states. The trend toward lower petrol prices has to be good for the national economy.
According to research operation GasBuddy, an average gallon of regular costs $4.05 in Alaska and $4.31 in Hawaii. Alaska has a lot of oil but little refinery capacity. Hawaii is so isolated in the Pacific that fueld has to be shipped there from hundreds of miles away.
The improvement in prices is clear from the national average, which is $3.47, down from $3.63 a month ago. California, with its population of 39 mln, got the worst of it. Prices were above $4 a gallon for most of the past several months. In some of its largest cities, which include San Francisco and Los Angeles, prices were higher. As a matter of fact, the price is still more than $4 in San Francisco now. But, throughout the state, the average has dropped to $3.90 a gallon.
States with large refineries, particularly near the Gulf Cost, have prices moving toward $3. The price in Alabama is under $3.20. In Mississippi, it has dropped below $3.23, and in Louisiana it is $3.24. The low prices are a matter of the luck of location. Some of these states need the break because they are among the poorest in the nation based on median household income
Many economists believe there is a tipping point at which high fuel prices hurt the economy. In reality there are probably many such points, which differ sharply between low income households and those who are not likely to be hurt much by petrol prices. In lower income households in which people have to drive long distances every day, fuel prices, together with food, clothing and shelter, eat up entire monthly budgets. The people in these household probably have no discretionary income, which is a large drag in a consumer-based economy.
Probably worse for the economy is the eroded purchasing power of the middle class, which is critical to GDP improvement. For many of them, $4 gasoline has also been an extreme burden, which has been partially lifted recently.