“A Labor Day surprise: Gas Price are not spiking”
Holidays and weekends are traditionally synonymous of an increase on the gas prices, because people travel more. Although this year something different is happening, and instead of going up, the gas prices are continuing to drop slightly. People were expecting a high gas price for the last Labor Day but it did not really happen. This event was taken as a surprise by all the consumers, and consequently they all got credit for it.
When the gas price was too high people were forced to change their driving habits. They seem to be trying to keep these habits, but they know that these significant lifestyle changes take time. Even with the low price people are not consuming more gas, they are cutting back on the gas spending on every little way, by choice or by necessity. Due to the new frugality the demand for gas is going down, making a change in the demand curve, which is going to shift to the left.
After Labor Day the prices are expected to go even lower, and the biggest responsible for the prices to be declining is the own economy. The unemployment rate is really high, which keeps people away from the roads. The supply is higher than lower and it will not change until a decrease in the unemployment rate happens to make an increase in gasoline demand.
There is a great deal of uncertainty about where the economy is headed. Demand for fuels expand when the economy is growing, then if an economic growth is not happening, the demand for fuel is not going to be higher.