Gasoline prices are down again this week — the national average for regular is $3.79 a gallon, which is about 3.8 percent lower than it was at the beginning of April.
Why? It’s not about drilling (as we pointed out before, drilling doesn’t affect gas prices); it’s about speculators relaxing, demand dropping, and refineries refining. As the Wall Street Journal explains:
Tensions over Iran’s nuclear program have eased, while softening economies in the U.S. and Europe have curbed demand. At the same time, some refineries pegged for closure are coming back online, and bottlenecks in the supply of crude oil are becoming unclogged.
So why gas prices on a real estate blog? Because (again, the Journal explains this well):
Falling prices … provide a form of stimulus, as money that otherwise would have gone into drivers’ tanks instead flows to more-productive uses. The [Energy Information Administration] estimates that a 10-cent drop in pump prices can add roughly 0.1% to disposable household income.
More household income leads to greater consumer confidence, and that’s going to have an impact on housing.
It’s too bad that the things that affect gas prices are mostly out of our control — speculators, Iranian sabre-rattling, European demand — but we’ll take the good news where we can.