There's some good news behind the discouraging headlines on the economy: Gas is getting cheaper. It's dropped to $2.99 in some areas of South Carolina and could soon fall below $3 in a handful of Southern states.
A plunge in oil prices has knocked more than 30 cents off the price of a gallon of gas in most parts of the U.S. since early April. The national average is now $3.61. Experts say it could drop to at least $3.40 before Labor Day.
If Americans spend less filing their tanks, they'll have more money for discretionary purchases. The downside? Lower oil and gas prices are symptoms of weakening economic conditions in the U.S. and around the globe.
On Friday, oil plunged nearly 4 percent as a bleak report on U.S. job growth heightened worries about a slowing global economy and waning oil demand. Sobering economic news from China and Europe also contributed to the drop.
West Texas Intermediate, the benchmark for oil in the U.S, fell $3.30, or 3.7 percent, to $83.23 per barrel, the lowest price since early October. The drop adds to a 17 percent decline in May. Brent crude, which is used to price international oil, lost $3.44, or 3.4 percent, to $98.43 per barrel, its lowest price since January 2011.
That means some relief at the pump for U.S. drivers, even if they're worried about jobs. Auto club AAA says pump prices fell nearly 5 percent in May, the largest monthly percentage drop since November last year. Some station owners in South Carolina on Friday even presented drivers with a magic number: $2.99.
Dan Durbin, president of R.L. Jordan Oil Co., says low wholesale prices allowed seven of the company's Hot Spot stations in Spartanburg, S.C., to lower the price to $2.99 per gallon Friday. That's a gift for drivers, with the summer driving season just getting started.
Durbin predicted that more of his stations and some competitors will lower prices once they sell off higher-priced supplies currently in their tanks. South Carolina was the first state to have prices fall below $3 a gallon because it has the lowest gas tax in the nation.
Patrick DeHaan of Gas Buddy expects prices to soon fall below $3 a gallon in Tennessee, Alabama, Mississippi, Oklahoma and Missouri. Those states already have low gas prices and are located near major infrastructure such as refining hubs.
While lower gas prices will help consumers' budgets, it's questionable how much they'll boost overall confidence.
"If you don't have a job, it doesn't matter if gasoline prices are $5 or $2 a gallon," said Phil Flynn, an analyst for The Price Futures Group.
The unemployment rate rose to 8.2 percent from 8.1 percent in April. U.S. employers added 69,000 jobs in May, the government said, which is the smallest number in a year and far short of the 158,000 new jobs expected by economists.
Energy futures fell across the board, as did global stock markets. Heating oil fell 7.53 cents to $2.628 per gallon, gasoline futures fell 6.59 cents to $2.657 per gallon and natural gas dropped 9.6 cents to $2.326 per 1,000 cubic feet. The S&P 500 stock index and the Dow Jones industrial average fell more than 2 percent in afternoon trading. Markets in Europe fell 2 percent or more. Markets in Asia showed smaller declines.
Besides the jobs report in the U.S., the Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing activity fell to 53.5 in May from 54.8 in April. A reading above 50 indicates expansion.
Two surveys showed that manufacturing slowed in May in China, which is a huge importer of oil and other commodities. Meanwhile, unemployment across the 17 countries that use the euro was stuck at 11 percent in April. That's the highest level since the single currency was introduced back in 1999.
© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.