Falling petrol prices are luring US motorists back to the pump.
Retail petrol prices have fallen 25 cents (Dh0.92) a gallon since coming within pennies of hitting $4 (Dh14.72) a gallon in early May.
While data show that drivers are using some of the savings to fill their tanks, the rest is finding its way into the broader economy, analysts say. That would be a welcome shot in the arm for the struggling US economy, but prices for another key fuel diesel are still high and muting the impact.
"There is a near-term economic benefit from lower oil prices even if all of the price savings go to buying more petrol," said Mark Zandi, at Moody's economy.com. "The extra petrol consumption is providing the fuel consumers need to get to where they are going." Most of the savings, he said, will go to supporting other spending away from the pump and increased saving. Most US households, he said, lowered their saving rate to pay for the higher cost of petrol.
Demand for distillate fuel (diesel and heating oil) is one of the strongest growth sectors in the global oil market and is propping up US diesel prices. Diesel powers trucks and trains that move goods throughout the country.
Petrol prices averaged below $3.50 a gallon in four states on Friday, with only Alaska and Hawaii posting above $4 a gallon for regular fuel, according to AAA Daily Fuel Gauge. Six weeks ago, petrol averaged above $4 a gallon in one out of every four states.
Diesel prices, though, are rising again after posting smaller losses than petrol in recent weeks.
US petrol sales volumes rose modestly from a year ago in the past two weeks, which hasn't happened since February. Economists say high petrol prices act like a tax on drivers and hurt the overall economy by pulling out more dollars that could be spent elsewhere.
From / Gulf News