Lower Gas Prices Add Fuel To U.S. Economic Recovery
DAVID GREENE, HOST:
Low oil prices are a big reason for the positive economic news this week. The Commerce Department says the U.S. economy is growing at its fastest pace in 11 years. Consumer spending is up. And, of course, gas prices are way down. As NPR's Chris Arnold reports, in 2015, cheaper gas could be the thing that finally kicks the economic recovery into a higher gear.
CHRIS ARNOLD, BYLINE: For most Americans, wages have been stagnant since before the financial crisis. But for many, especially if they drive a lot, right now they're getting in effect a pay raise in the form of cheaper gas. In fact, if prices stay where they are right now, around $2.40 a gallon, that would mean an extra $1,500 per household next year. Based on median household income, that's a 3 percent raise for the entire country.
BOB COSTELLO: Oh yeah, it's a game changer. And it's going to really help us go into 2015.
ARNOLD: That's Bob Costello. He's the chief economist of the American Trucking Associations. So he pays close attention to fuel prices and what they mean for the economy.
COSTELLO: This is the shot in the arm that could get us finally going on a more consistent basis.
ARNOLD: Costello's talking about the overall economy. But he says if you zoom in on the trucking industry, you see some especially good things happening.
COSTELLO: This is an industry that consumes almost 38 billion gallons of diesel every year.
ARNOLD: And with diesel prices down nearly a dollar a gallon, you don't have to be an economist to figure out that trucking companies are already saving together billions of dollars on fuel. And that can create what's called a virtuous cycle, where that savings or extra money gets put back into the economy, boosting it in other ways.
COSTELLO: I talk to trucking companies every week that say, you know, we went out and bought ten new trucks in the last month.
(SOUNDBITE OF TRUCK ENGINE REVVING)
ARNOLD: That's the sound of a truck at Dark Horse Express, which is a small trucking company outside of Nashville, Tennessee. Jeff Hickman's the owner. He's got 15 trucks on the road, which means compared to last year, he is saving a lot of money on fuel.
JEFF HICKMAN: It's anywhere from $5,000 to $6,000 a week. For a company our size, it's - it's huge.
ARNOLD: Hickman says many trucking companies are hauling more stuff this year too. He specializes in frozen food, so he's got some truckloads of turkeys headed to grocery stores, some frozen pizzas.
HICKMAN: Everybody is busy. I don't know anybody that has trucks sitting because there's not freight for them to move.
ARNOLD: And Hickman says that means that he's been using some of that savings on fuel to pay higher wages to his truck drivers because there's more competition to get good drivers and to keep them.
HICKMAN: We are paying our drivers almost 10 percent more over last year's wages.
ARNOLD: Other workers in other industries should be so lucky. Overall, there's been very little growth in wages, though one recent report showed that maybe they're finally starting to rise. But either way, cheaper gas is putting money into people's pockets. Over in Idaho Falls, Idaho, 23-year-old Lacey Bennion says gas is just $2.29 a gallon.
LACEY BENNION: It's been a huge blessing for me and for my family. And my husband and I are newlyweds. We haven't been married for quite a year yet. He's still a student, and I'm working full-time.
ARNOLD: Bennion says she's driving an old Dodge Stratus with 200,000 miles on it, which, of course, doesn't get the best gas mileage. So with the extra money, she says, she and her husband actually felt better about buying a few more presents this year, including some stuff for their kitchen.
BENNION: It feels good to buy something new that we've needed for a long time because you feel that much better 'cause you really needed that thing.
ARNOLD: And heading into the new year, the economy is continuing to gain jobs and grow more quickly. Wages, as we said, may even be starting to rise a bit. So add in the cheaper gas and things are looking better than they have in a long time. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.