Gas Prices Reach $1.99 for First Time Since 2009

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The average national price for a gallon of regular gasoline reached $1.99 for the first time since 2009. The primary engine for the drop is collapsing oil prices which have fallen under $36 a barrel. However, the price of gas and oil have been extremely damaging to some oil industry companies, so the news in not all good.

According to GasBuddy:

For the first time since March 25, 2009, the national average price of gasoline has dropped below $2 a gallon. Currently over two-thirds of gas stations are selling gasoline at $1.99 or less, yet the national benchmark had previously failed to breach $2 a gallon as fuel prices have been stubbornly slow at dropping in the West and new refinery issues there may soon lead the national average back up. For now, with the recent decline in crude oil prices continuing, the weeklong $2 barrier has finally been crossed.

And the drip is spreading across the nation, state by state:

Thirty states now have an average price below $2 and another five states: (MD, IL, NH, FL and UT) are poised to join the club within days as the momentum has brought their respective averages within a nickel of $2 a gallon. Only 33% of the nation’s gas stations have prices over $2 a gallon and just three states have zero gas stations under that level: Hawaii, California and Nevada

In some states, over 95% of gas stations have prices under $2.

The low prices of gas and oil both help and hinder the American economy. Presumably, as drivers spend less on gas, their consumer spending rises. Consumer spending is generally believed to be two thirds of U.S. GDP. Real annual household income has not risen in a decade based on inflation adjusted numbers, so any drop in core living expenses is critical to the national economy.

On the other hand, the oil and gas industry, and related transportation companies, have been crippled by the drop. Fracking activity in states, particularly North Dakota, has been gutted by oil prices which are lower than their cost of production. Oil services companies, particularly Tranocecan ((NYSE: RIG) have made thousand of layoffs. Tranocean’s share price is down 30% in the last six months. The largest oil companies, including Exxon (NYSE: XOM), have net incomes which have collapsed as well. Exxon’s share price has fallen 10% during the last six months.

Low gas prices may lift most of the economy, but the improvement is uneven.