Oil prices are expected to stay around $50 a barrel through next year, say analysts, though that may not give much of a boost to consumer spending, the economy and stock market.
That’s because the the 60 to 70 percent plunge in oil prices since July is due to the collapse of demand as the credit crisis careens through the global economy. So whatever benefits lower oil prices normally bring is more than offset by the profound weakness in the economy.
But with that said, the savings to consumers is still substantial.
Every 10 cent drop in the price of gasoline is the equivalent of a $12 billion tax cut, calculates Nariman Behravesh, chief economist with IHS Global Insight, the forecasting firm.
“So the drop from around $4 a gallon to less than $2 is the equivalent of a $250 billion tax cut, more or less,” he said.
And right now the average U.S. retail gasoline price dropped 8 cents in the last week to $1.81 a gallon, the Energy Information Administration said Monday.
And that leads to our Fast Money Reader Poll.
If gasoline prices remain around $1.81 a gallon, generally speaking will you spend more?
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CNBC.com with wires