Big drops in energy prices often happen when the economy tanks, but economists say that’s not the case now — even though gasoline is more than a dollar a gallon cheaper than a year ago.
Jeffrey Pelton, an analyst at GasBuddy.com, said Monday an excess supply, the switch to winter blends, and the end of the summer driving season will push prices even lower.
“We feel very strongly that there’s a 10- to 12-cent drop in price each month from here to December. You’re definitely going to see $1.50,” he predicted. “You may see some smaller places, independents, $1.18, $1.25.”
Joel Naroff, chief economic adviser to the New Jersey Business and Industry Association, said the initial impact of lower energy prices has had a negative economic effect as energy producers cut back investment.
“But it’s really good having low energy costs if it is consistent, because people will feel good about things, they will be able to drive more, they will be able to do more things with that added money,” Naroff said. “So, over time, this could be a very positive thing for the economy.”
The U.S. economy is getting better, he said.
“Consumers are spending money, they’re buying new vehicles like crazy. Housing is coming back,” Naroff said. “Really, overall, this is a pretty solid economy, and I expect that will be the case the rest of this year and as we go through 2016.”