NEW YORK -- A summer road trip may not be such a bad idea after all.
Gasoline prices are falling fast. In the past seven weeks, the average U.S. retail price has dropped 38 cents, and another 25-cent drop is expected by mid-July.
When prices approached $4 in early May, drivers were worried that $5 gasoline was a possibility this summer. But since then, oil prices have collapsed, the result of slowing economic growth in developed countries, weaker demand for oil and gas and this week's decision by the U.S. and other countries to release 60 million barrels of oil from strategic reserves. Economists say falling prices will benefit consumers by leaving money in their wallets and making them feel freer to spend on travel, shopping and dining.
Ron Meyers, 51, a handyman from Little Rock, was doubtful that he could afford the drive to visit family in Pennsylvania.
Now, thanks to cheaper gas, the trip is on. And he plans on seeing a few more summer movies, too.
"You can go out and have a good time, and have a little money left in your pocket," he said.
Economists say that while, for instance, a 25-cent-per-gallon drop only saves the typical driver $12.50 per month, it has a huge effect both on the economy as a whole and on the psychology of consumers.
Naveen Agarwal, who helps small businesses and car companies manage fuel costs as CEO of Pricelock in Redwood City, Calif, said he expects drivers will travel longer distances this summer than originally planned. And they'll spend as they go.
"They'll be a little bit more liberal about their consumption instead of just having a barbecue in their back yard," Agarwal said.
For the first five months of the year, gasoline prices went in one direction: up. Growing economies, especially in Asia, burned more gasoline, diesel and jet fuel. Turmoil in the Middle East and North Africa prevented oil from reaching the market and scared oil traders into bidding prices higher.
Energy economists and Wall Street investment bankers caution that oil is likely to rise above $100 again this fall, particularly if oil producers struggle to meet rising global demand. Hurricanes in the Gulf of Mexico and further unrest in the Middle East could affect prices.
Agarwal expects gasoline prices will return to a range of $3.50 to $3.75 per gallon by the end of the year.