As a sign of how rapidly gasoline prices have fallen and how low they have become, they have dropped below $3 in 19 states, based on an average gallon of regular. Nationwide, the price per gallon has dropped to $3.03, from $3.34 a month ago and $3.31 a year ago, according to research firm GasBuddy. There is a debate about how this will affect consumer spending, particularly during the upcoming holiday season.
The 19 states are South Carolina ($2.77), Tennessee ($2.78), Mississippi ($2.80), Texas ($2.82), Virginia ($2.82), Missouri ($2.82), Alabama ($2.83), New Jersey ($2.85), Arkansas ($2.86), Louisiana ($2.87), Delaware ($2.89) , New Mexico ($2.90), Georgia ($2.93), Ohio ($2.93), North Carolina ($2.96), Kansas ($2.97), Oklahoma ($2.98), Arizona ($2.99) and Maryland ($2.99).
Many of the states have one of two things in common. First is that they are near the oil refineries in the Gulf or in other areas with refining capacity. As far as proximity to the Gulf is concerned, this is certainly true of Louisiana, Mississippi, Oklahoma and Texas.
The second thing several of these states have in common is low gas tax rates. According to the Tax Foundation, among the 15 states with the lowest gas tax rates, seven make the list of those with gas prices under $3.
As consumer activity begins for the holiday season within two weeks, economists have argued that low gas prices, particularly among the lower and middle classes, will improve discretionary income above and beyond the normal daily costs of housing, clothing, food and gas. Coupled with dropping unemployment rates, the consumer economy has regained some of its health and can contribute more to gross domestic product.
This may not be entirely true. Real wages among most Americans have not risen over the course of the past decade. So, gas prices may have only a muted effect on the consumer economy.
While it is difficult to argue that low gasoline prices have not helped consumers, it may not have helped them enough to unlock a flood of holiday spending.