Oil Price Dip May Buoy San Diego Economy
Monday, August 15, 2011
Oil prices have been falling steadily in the past few weeks and that could give San Diego's economy a bit of a boost, because gas prices are trending down, as well.
SAN DIEGO Retail gasoline prices have fallen below $3.60 a gallon at many gas stations in San Diego County. The Utility Consumers' Action Network tracks local price. The group said the price peaked at about $4.25 this past spring.
Prices on the street are reacting to falling oil prices on the future's market and the growing petroleum inventories in the United States and that could give a little boost to San Diego's economy.
"Consumer confidence is tied very closely and intimately with the price of gasoline and fuel," said Charles Langley, a consumer advocate at UCAN. "And when fuel prices drop, consumer confidence goes up and if there was ever a time when we needed consumer confidence in this country, its right now."
Oil prices are falling because analysts are predicting less demand for oil around the world. Cheaper oil may cut into the industries' profit, but Tupper Hull, president of the the Western States Petroleum Association, agrees falling price are good for the economy.
"Fuel costs are a significant cost to both businesses and consumers," said Hull. "When prices come down, that leaves some additional money in the economy to be spent on other things."
A University of San Diego economist calculates that a 10 cent drop in the price of gas frees up $7 million a month that can be spent on other things. If the price falls 50 cents a gallon, that boost could hit $35 million a month.
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