As millions of Americans have discovered – not least among them those traveling over Thanksgiving Weekend – the price of gasoline has plunged in recent weeks. The U.S. national average is $2.79, the Associated Press (AP) reports, almost a full dollar below its peak in June, and heading even lower. When former House Speaker Newt Gingrich ran for president two years ago, he vowed that if elected, he had a plan to bring gas down to $2.50 a gallon. Critics chided Gingrich’s pledge as an empty promise “too good to be true.” And now, $2.50 per gallon is close to becoming a reality.
Better yet, falling fuel costs mean it will be cheaper to heat our homes in what might be another long, cold winter.
Where the oil price freefall is music to Americans’ ears, it is not quite so harmonious across the Atlantic. Analysts are concerned that the price plunge portends new signs of weakness in the global economy, AP reports, and the Eurozone is particularly concerned about low inflation. Greece, in particular AP says, will be challenged by low inflation as it tries to reduce its debt, and the European Central Bank (ECB) is none to happy about it, either.
But European economist Christoph Weil is more optimistic, predicting that Greece, along with Spain – also troubled and in debt – will use low inflation to increase its price competitiveness, Reuters reports.
But the Wall Street Journal predicted this problem several months ago, citing a need for “more inflation” in Greece: “Deflation is playing havoc with the country’s solvency, pushing its debt-to-GDP ratio ever higher despite draconian budget austerity.”
Investor’s Business Daily reported that the ECB plans to ease the reins further so as to allow prices to rise.
Fox News, meanwhile, had a different take on the reason for the price drop: OPEC is reeling, Fox reported, because of the increase in fracking in the United States.