The recent decline in fuel prices has resonated with consumers, 80% of whom report that gas prices are lower than they were 30 days ago and, for the first time in two years, more consumers think that gas prices will be lower in the next 30 days (30%) rather than higher (27%), according to the latest NACS Consumer Fuels Survey.
The lower prices have not had an appreciable effect on consumers’ feelings about the economy in general, however. Consistent with the prior three months, 47% of consumers are “somewhat” or “very” optimistic about the economy. Meanwhile, 77% of consumers said that gas prices are having a “great” or “some” impact on their feelings about the economy, which is the lowest percentage recorded in two years. Gas prices continue to have a greater impact on those 18-34 years of age, 88% of whom said that prices affected their feelings about the economy.
Consumers report that the average price of regular gasoline where they live is $2.70, which is 95 cents per gallon lower than the average consumer-reported price in July and marks the fourth consecutive month in which the reported price has decreased.
Lower prices also affected consumers expected expenditures in the upcoming month, with 24% saying that they will spend more than they did last month, up from 21% in November and 15% in October. Consistent with the degree to which gas prices affect their feelings about the economy, consumers ages 18–34 seem buoyed by the lower fuel price, with one-third expecting to spend more in the upcoming month.
Lower fuel prices could have a negative effect on the short-term prospects for alternative fuel vehicles and other fuel-saving measures often employed by consumers. For the first time in a year, the gas price at which consumers would try to reduce how much they drive was more than $1.00 higher than the price they are paying now and the price at which they would seek an alternative to driving neared $2.00 above current prices. This indicates that consumers are less prone to consider alternative methods of travel due to lower fuel prices.
NACS, which represents the convenience store industry that sells 80% of the gas sold in the country, conducts the monthly consumer sentiment survey to gauge how gas prices affect broader economic trends. The National Association of Convenience Stores (NACS) survey was conducted by Penn, Schoen and Berland Associates LLC; 1,110 gas consumers were surveyed Dec. 9-11, 2014. Summary results are at www.nacsonline.com/gasprices.