Despite recent rises, gas prices are down 41% since their all-time high of $4.11 a gallon in July 2008. What are consumers doing with their gains?
Paying off debt and buying groceries, according to a survey by Allstate and The National Journal. Or keeping it in their wallets.
The price of a gallon of unleaded has fallen from its all-time high of $4.11 in July 2008 to $2.42 now, according to the American Automobile Association. On a 16-gallon fill-up, that's a savings of $27.04.
For many people, that savings just makes it a bit easier to make ends meet. The February survey of 1,000 adults found that 78% had saved money at the gas pump. Thirty-one percent are using their savings for basic necessities, and 27% are using the extra money to pay off debt or avoid going further into debt.
"This is not what the textbooks tell us would happen," says Ken Goldstein, economist at The Conference Board. "At least to date, we've seen a rise in confidence, an increase in saving and a decrease in spending."
Lower gas prices have the biggest effect on those in lower income brackets. "Lower-income people are going to spend their gas savings because they have to," says Alec Levenson, professor of economics at the University of Southern California. "Those who are spending on necessities are not making ends meet now."
And the Great Recession left a deep scar on debt-laden consumers. "People relied far too much on debt before the recession." Levenson says. After being stretched too far, many have tried to pay down debt aggressively.
Many of those surveyed were worried about wages and the cost of necessities. Just 28% said the employment situation was good to excellent, 77% said that wages were fair to poor and 79% said the cost of necessities was fair to poor.
Only 25% rated the economy as "excellent" or "good." Nevertheless, 32% said that lower gas prices had made a "huge" or "significant" difference in their lives.
Consumers seem to be treating the drop in gas prices as temporary, Levenson says. "It's more like a bonus than a raise," he says.
And they're probably confused that all their energy costs didn't go down at the same time, as they normally do. "Gas prices were down this winter, but electricity prices were up," Goldstein says.
Gas prices have fallen the past nine days, according to AAA, and are expected to go lower as crude prices fall from global overproduction. Current national price per gallon: $2.42, down from $2.45 a week ago.
But don't expect a boost in consumer spending until gas stays low for longer, Goldstein says. "Until we're sure of what this means and where prices are going, no matter where you're from, we're all from Missouri."