Gas prices could plummet by Thanksgiving

The Street

TheStreet’s Conway Gittens brings you the biggest news of the day, including what investors are watching and how you might be feeling major relief at the pump by Thanksgiving.

Transcript

00:00I'm Conway Gittins reporting from the New York Stock Exchange. Here's what we're watching on the street today.

00:04Wall Street is taking a disappointing jobs report in stride. The U.S. economy only added

00:12142,000 jobs in August. That was less than the

00:16160,000 jobs expected, but higher than the downwardly revised

00:2089,000 for July.

00:22Investors are taking comfort, however, in the first drop in the unemployment rate in five months to 4.2 percent.

00:29Altogether, the report leaves the door open for a modest interest rate cut by the Federal Reserve when it meets in September.

00:38In other top news, inflation is still a problem,

00:41but there are fresh signs that it is loosening its grip. The average price to fill up at the pump hit

00:47$3.31 during the first week of August,

00:50according to AAA. That's down 50 cents from a year ago and the lowest price we've seen in six months.

00:56The good news doesn't stop there. Americans could see average gasoline prices drop below $3 by Thanksgiving,

01:03according to Patrick Dahan of GasBuddy.

01:05Quote, as long as we don't see a major hurricane head into the Gulf and the situation improves in the Middle East,

01:12the national average could fall below $3 in the next two months.

01:16GasBuddy is already tracking eight states at that level or lower.

01:20So why are gas prices falling? Number one,

01:23it's seasonal. Gas prices typically drop this time of year as Labor Day marks the end of the peak summer driving season.

01:30Number two, it's global. Right now,

01:33the global market is oversupplied and oil demand is weak around the world.

01:38The law of supply and demand dictates that when supply is high and demand is low, then prices fall.

01:43The drop in gasoline prices has wider implications for your wallet. Elevated energy costs

01:49originally fed into the inflation spike that prompted the Fed to hike rates to a 25-year high.

01:55Now that that reverse is happening, the Fed has room to lower interest rates,

02:00which means cheaper borrowing costs for mortgages, car loans, and credit cards.

02:05That'll do it for your daily briefing from the New York Stock Exchange. I'm Conway Gittens with The Street.

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