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Could Low Gas Prices Spark Consumer Spending Surge?

Gas prices have a very real impact on consumer spending. That’s partially because gasoline expenditures make up a decent share of U.S. household budgets, but also because they are a very common measure of pricing and inflation.

After all, there’s no more public measure of how things cost than the gas prices trumpeted at dozens of service stations you pass every day.

In inflationary times, gas prices can be a drag on consumer spending — but thankfully, right now we are seeing the opposite.

Well, thankfully for consumers, anyway … big oil stocks like Exxon (XOM), Chevron (CVX) and BP (BP) are probably not pleased.

Here’s what’s going on in gas prices right now, and what it might mean for consumer spending:

Gas Prices Trending Down

According to the gasoline gurus over at GasBuddy.com, “October gasoline prices fell as steadily as the leaves this month” to average $3.358 a gallon. That’s the cheapest monthly average since January this year, and the cheapest October since 2010.

Furthermore, October’s average gas prices are 18 cents cheaper per gallon than September, the biggest month-to-month drop of the year. And according to GasBuddy, “Every day in October had a lower price than the same day last year, bringing the streak of days when the price was lower than the same day last year to 86 straight.”

Some states are even reporting gas prices under $3 right now!

Unfortunately, that’s not the trend everywhere. The most expensive stations averaged $4.146 a gallon — marking a huge gap of over $1.20 per gallon between the cheapest and most costly pump pricing.

Happy Holidays?

It’s unclear how connected gas prices are to consumer spending, but as long as energy prices remain soft, it’s natural to think that Americans have more cash to spend.

That could be great news as we enter an important holiday season.

Of course, with economic uncertainty still pretty high the U.S. consumer might simply want to hoard that extra cash for a rainy day … so we’ll see in a few weeks whether consumers really have any spring in their step.

More on Gas Prices

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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