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 Commerce Department data shows that the crude's 70 percent drop
since mid-2014 cut households' annual spending on gasoline and other
energy products by $115 billion, equivalent to roughly 0.5 percent
of gross domestic product.
At the same time, however, savings increased by $121 billion and
while the data gives no indication where the money has come from,
the survey suggests the windfall accounted for a significant part of
the sum.
(Graphic: http://tmsnrt.rs/1QHMY5V)
The Reuters/Ipsos poll shows 75 percent of 3,068 Americans who
answered questions on gasoline savings said the extra money helped
them cover basic needs and the majority have not used their windfall
to buy big ticket items. Over 40 percent of respondents said the
savings had helped them pay down debts, according to the Jan. 15-27
online poll, which had a credibility interval of plus or minus 1.8
percentage points.
"It obviously hurts less when I go to the grocery store," said Karen
Joines, a recruiting firm product manager from Peachtree City,
Georgia. Joines, who participated in the survey, estimates she saves
$30 a week thanks to cheaper gasoline but has no plans for big
purchases, in part because she worries low prices will not last.
Some economists say such doubts and the still-fresh scars of the
2007-2009 recession could explain the muted effect of cheap gas on
consumption. For example, the economy only in mid-2014 recovered the
more than 7 million jobs lost during the downturn.
"We don't seem to be getting the benefits from cheaper gasoline that
we did when the economy was healthier," said veteran oil economist
and independent consultant Phil Verleger.
Dallas Federal Reserve President Robert Kaplan said another reason
Americans appeared wary of spending what they saved at the pump
could be that more and more of them were approaching retirement.
"They are conscious of that (and) they need to save more," Kaplan
told Reuters in an interview.
HALF THE BENEFIT
The Dallas Fed, whose area includes the oil patches of Texas,
Louisiana and New Mexico, estimates that a 50 percent fall in oil
prices now adds around 0.5 percentage points to economic growth over
a year, half of the impact seen before America's oil boom.
One reason is that the oil sector has grown over the past decade, so
spending and job cuts there weigh more on the whole economy. Cheaper
oil also helps less because cars and machinery have become more fuel
efficient, according to the Dallas Fed.
Thanks to hydraulic fracturing and shale drilling boom that made the
United States the world's top oil producer in 2014, the nation also
imports less oil than ever.
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That goes to explain why in the public eye the modest benefits of
cheap energy enjoyed by all get overshadowed by the havoc the oil
slump wreaked in the energy sector and the nation's oil patches.
Tumbling prices forced producers and oilfield services companies to
slash budgets, driving some into bankruptcy and many deep into the
red. Markets have grown so bearish about the sector that when oil
producer Hess <HES.N> reported a fourth quarter loss of over $1.8
billion, its shares have risen because investors had braced for even
more damage.
Yet even as job losses and lost tax revenues hit oil-producing
states such as Texas or Alaska, the drag on the U.S. economy as a
whole has been limited.
The oil-dominated mining sector accounted for just 1.6 percent of
GDP in the third quarter and jobs in oil and gas extraction and
services account for 0.3 percent of U.S. employment, down from 0.4
percent during the boom years. (http://tmsnrt.rs/1JZSj7d)
The investment in U.S. mining structures, which is dominated by oil
and gas exploration and well drilling, has fallen at a $70 billion
annual rate since the fourth quarter of 2014, according to Commerce
Department data. Yet as Goldman Sachs estimates the overall drop in
energy investment subtracted only about 0.3 percentage points from
2015 economic growth.
Barclays economist Michael Gapen forecasts that a further decline in
energy investment could knock another 0.2 percent from this year's
U.S. economic output.
The U.S. job market also appears robust enough to absorb job losses
in the energy sector and related industries. Goldman Sachs estimates
such losses at 30,000 to 35,000 a month, but that compares with
292,000 jobs U.S. economy as a whole added last month.
(Reporting by Jason Lange and Lindsay Dunsmuir; Editing by David
Chance and Tomasz Janowski)
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