The Average Price of Gasoline is Below $3.00 in Some States

by Marilou Moursund on November 13, 2013

in Energy,equity market,Fed policy,inflation/deflation

As the market has continued its climb, there has been a stealth move to the downside in the price of gasoline.  This should help both businesses and consumers coming in to the holiday season.  From the linked WSJ article:

U.S. gasoline prices have fallen to their lowest level in nearly 33 months amid a boom in domestic oil drilling, leaving consumers with some extra disposable income just in time for the holiday-shopping season.

Tuesday’s national average price of $3.18 a gallon—26 cents below a year ago—was the lowest since Feb. 22, 2011, when it was $3.17, according to AAA, which tracks daily gas prices. The automobile club predicted that the national average could fall close to $3 a gallon by year’s end because of abundant supplies, declining seasonal demand and lower crude-oil prices.

The drop in the price of both crude and gasoline should help the U.S. economy to muddle along at its slow pace of 2.0%.  Ed Yardeni thinks that this slow growth outlook is positive for the equity market barring a melt-up in stock prices.  From his Morning Briefing today:

The global economic outlook for 2014 continues gradually to improve. The ultra-easy monetary policies provided by the world’s major central banks haven’t been as stimulative as they expected. However, they’ve certainly succeeded in averting the dire “endgame” scenario touted by the perma-bears over the past five years. 

As this scenario has lost its immediate and widespread credibility, more businesses are getting back to business by expanding their payrolls and capacity. They are still doing so cautiously, which suggests that while global growth prospects are improving, a boom is unlikely. That’s fine with me, since it increases the odds of a longer global economic expansion and of a secular bull market in stocks.

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