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Gas Prices: Its Winners and Losers

January 27, 2016 By Matthew Hritz Leave a Comment

Long story short, gas prices have plummeted over the past few months due to an international production glut and stagnated demand. As always, low oil/gas prices has its winners and losers:

WINNERS:
-The middle/lower class- gas prices are always a tricky expense for those within low-to-average income brackets. For those driving every day, spending less and less money on gas during every pump visit will add up to relatively significant savings over a period of time.
-Convenience/mega-stores- Savings compiled from spending less on gas, especially for the middle/lower class, are often spent on food and other necessities at stores such as Target, Walmart, Wallgreens, CVS, and 7-11.
-Airlines- lower gas prices are a significant operations expense for airlines, making gas prices a factor in setting price-points for plane tickets. When prices are this low, airlines get to lower their airfares, which leads to more travelers, which leads to both lower operating costs and higher revenues for airlines.
-Frequent air-travelers and drivers- for the same reasons already listed above.

LOSERS:
-Stock traders/investors- the stock markets have gotten crushed lately over plummeting oil prices. The DJIA (Dow Jones Industrial Average) hemmoraged nearly 10% of its value over a disastrous 2 weeks in the stock market. This could also mean trouble for 401k account holders who invest their savings in publicly traded companies.
-Southeastern economies/ oil industry- in states such as the southeast, where the oil industry remains a large part of its economies, lower gas prices (lower oil prices), causing less revenue for oil companies, usually means large lay-offs for the sake of lowering production costs, whose effects tend to trickle down to other industries in those states.

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