In a year when many parts of the Tampa Bay business market rebounded, what single trend rises above all others to win the 2014 Award for Best Boost to the bay area economy?
A stock market flirting with 18,000 in recent weeks was one top contender. With the Dow kicking off 2014 at 15,698, it has again been a good year for investing.
What about the shrinking unemployment rate? It deserves high praise and competed mightily for the top 2014 award (my own concoction for our regional economy). Tampa Bay's regional jobless rate now sits at a respectable 6 percent, down from 6.8 percent a year ago and a perilous 12 percent this time in 2010.
Nope, the Best Boost Award for 2014 goes to …
Falling gas prices.
If you drive a lot, you know what I'm talking about. There's money actually left in your pocket after filling your gas tank.
How much money? It depends how much you drive, of course, but looking forward, analysts point to savings in 2015 ranging from $750 to more than $1,100. That makes for a nice raise or bonus in an era of stalled paychecks.
That's why gas prices deserve the Best Boost Award. Everybody benefits.
But it's much more than that. Lower gas prices boost the overall economy by reducing shipping and transportation costs. Car dealers are enjoying banner days after some wretched sales years. Major retailers like Walmart say they're benefiting from lower gas prices.
And what of Florida's string of record tourism? Cheaper gas will only encourage more budget-conscious drivers to head to the Sunshine State this winter.
After peaking in the bay area and Florida this year in April at close to $3.73 a gallon for regular, gas prices have dropped dramatically. Tampa Bay's average price is about $2.56 (as of Friday), with plenty of cheaper outlets offering a gallon under $2.40. They can be found at the Marathon, RaceTrac, Chevron and Citgo ($2.35 on Friday) stations along Bearss Avenue in Tampa, the St. Petersburg Citgo on 49th Street N or at the Costco on Gulf-to-Bay in Clearwater, among other locations, says the Gas Buddy website.
We have not seen such prices since 2010. Two years earlier, in the summer of 2008, gas prices topped $4 a gallon (a modern record) in the Tampa Bay market.
Now we're about $1.50 cheaper. Just in time, retailers note hopefully, for the holiday season.
"American workers have been waiting years for a big raise," the Wall Street Journal reported this past week. "The bump is finally coming — at the gas pump."
How big a bump? Research firm ClearView Energy Partners estimates the average American consumer (not household) could save $380 during the coming year, if prices stay at their current levels under $3 a gallon. IHS Global Insight likes a bigger bump: $750 this coming year in savings from gas for the average family. Other analysts push that figure over $1,000.
That's not exactly a windfall, but it's probably the biggest income bump many folks have felt in years. In 2013, median U.S. income, by comparison, grew only $181 from a year earlier after adjusting for inflation.
Mark Zandi, chief economist at Moody's Analytics, estimates that if gas prices stay low, U.S. consumers could find an extra $100 billion in their wallets next year compared with this year. Zandi calls it "the difference between a good year and a great year."
Wall Street's Goldman Sachs pegs the savings higher, at $125 billion. "As a share of total household spending, middle-income households spend the most on gasoline," Goldman analysts say in a note to clients. "In other words, the drop in gasoline prices can be considered a middle-class tax cut."
A recent Bank of America/Merrill Lynch study finds families with annual income of less than $50,000 spend more than 20 percent of their take-home pay on energy, more than double the rate spent by families earning more than $50,000 a year. For those households, cheaper gas is a serious gift.
The beauty of the Best Boost Award is that lower gas prices may stick around. As Gas Buddy recently blogged: "This may be too good to be true. The Energy Department now predicts that next year's average price of gasoline across the U.S. will be $2.60 a gallon. That would be 23 percent below this year's projected average and the lowest full-year average since 2009."
As long as the crude oil market continues to dip in search for a bottom, consumers will pay lower gas prices. Enjoy the ride.
Contact Robert Trigaux at [email protected] or (727) 893-8405. Follow @venturetampabay.