In the Christmas shopping rush, something else is on sale this year: gasoline. Just in time for the holiday, pump prices have dropped to their lowest price of the year. Some Americans are greeting the Christmas week by paying less than three dollars a gallon.
On average, Americans are spending almost 20 cents less per gallon than we were at Thanksgiving. That has left about $20 billion in the pockets of consumers, money that otherwise would have been poured into their gas tanks.
The drop in prices isn't a Christmas miracle. Instead, it's the traditional story of supply and demand. American appetite for gasoline hasn't been this low in the month of December since late 2001. Meantime, refineries have been working as hard as they have in the past six Decembers. And U.S. oil producers are pumping out more oil than they have since the late 1990s. Prices tend to inch higher Christmas week, but that may be difficult, given these dynamics.
Cheaper gasoline isn't the coolest or most romantic Christmas gift. But with most Americans facing higher taxes next year if there is no fix to the fiscal cliff, there is some comfort in lower energy prices.
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