How Have Consumers Spent Their Gas Savings?
By Samantha Oller on Jul. 20, 2016WASHINGTON -- What do consumers do with hundreds of dollars in savings from low gas prices? They buy more stuff at gas stations.
That’s one of the key findings from JPMorgan Chase Institute’s recent study on the spending habits of consumers after a full year of lower gas prices. To determine the full effects, researchers analyzed the anonymized transactions of 1 million Chase credit- and debit-card holders in 23 states for all of 2015. This was a year when gas prices averaged 25% lower than in 2014, and the Energy Information Administration was forecasting about $700 in annual savings for U.S. households.
How much did consumers actually save—and perhaps more important—how much did they spend, and where? Read on.
Seventy-two percent of U.S. households spent less money on gasoline in 2015 vs. 2014, with one-third saving more than $500. Middle-income households saved about $480.
For the 60% of households in the bottom three income quintiles—those earning less than $56,500—this was the equivalent of a 1% or greater increase in income. The lowest-income households—those earning less than $30,000—enjoyed the greatest boost in discretionary income, or a 1.4% boost.
While most U.S. households saved money on gasoline in 2015 vs. 2014, 28% actually spent more. Most were in California, where prices fell less than the national average.
The smallest gasoline savings as a percentage of income were on the West Coast and in urban Northeast regions. The metro areas with the slimmest savings included Los Angeles, San Francisco, New York, Las Vegas and Washington, D.C., where the equivalent income increase was 0.5% or less.
The biggest gasoline savings as a percentage of income were largely in the Midwest and Southeast, and less urban markets. Metro areas with the biggest savings included Indianapolis; Tucson, Ariz.; Dallas-Ft. Worth; Baton Rouge, La.; and Louisville, Ky., where the income increase equated to 1.2% to 1.3%.
The 25% drop in gas prices in 2015 vs. 2014 meant a potential savings of $632 for middle-income households. According to researchers, these households spent nearly 60% of their potential savings, with 34% going to nongas goods and services, which includes restaurants, retail—both online and brick and mortar—as well as groceries.
While gas prices were 25% lower in 2015 vs. 2014, spending at gas stations dropped only 19%. Researchers estimate that households actually boosted their spending at gas stations by $155, or 24% of their potential gas-price savings. This was either in the form of buying gas—more of it, or a better grade—or buying something inside of the convenience store.
Click here to download the full JPMorgan Chase Institute study, “The Consumer Response to a Year of Low Gas Prices."