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Thanks to the 55% crash in the crude oil price from its $100 highs in mid-2014, consumers have been saving money at the pump.
According to the Oil Price Information Service, national gasoline prices averaged $2.40 a gallon last year, compared to $3.34 per gallon in 2014. That allowed every American driver to save roughly $660. And this year, each driver is expected to pocket nearly $550 in savings thanks to low gas.
This cheap gasoline and oil price environment is allowing people to spend that extra cash elsewhere.
And this chart from French bank Societe Generale shows just how much low crude oil prices are affecting consumer spending in the United States…
The Low Crude Oil Price Is Increasing Spending in These Areas
As you can see, most of the extra gas money from low oil prices has been kept in savings. The data shows that about 0.75% of the average American's disposable income – or a person's total income minus taxes – has gone toward household savings. That means a person who earns $80,000 per year and pays at a 35% tax rate has likely donated about $390 of their extra gas money to their savings since June 2014.
The second-highest category of spending was health-related services. Roughly 0.4% of the average disposable income was spent on services like physician appointments and dental work. In other words, the same person with annual earnings of $80,000 and a 35% tax rate spent about $112 of his or her extra gas money on these healthcare services.
This chart also shows how consumers benefiting from this cheap crude oil price climate are pursuing experiences rather than goods. Money spent on recreational activities like concerts and movies has increased, while spending toward retail products like shoes and clothes has decreased.
And while Americans are saving money at the pump, many investors are starting to put that money back into energy investments…
The 84% rebound in WTI crude oil prices since their Feb. 11 bottom has renewed faith in the energy sector. According to Zacks Investment Research, one of the most popular oil ETFs – the VelocityShares Oil ETN (NYSE Arca: UWTI) – saw an inflow of $9.3 billion worth of investments in March.
With the crude oil price stabilizing in the high $40s, there are plenty of profit plays to be made in the oil sector.
That's why Money Morning Chief Investment Strategist Keith Fitz-Gerald – a trader and professional analyst with 30 years of experience – just recommended a specific oil stock to readers.
In fact, this stock is set to surge more than 16% in the next year, making it one of the best oil stocks to buy right now…
Alex McGuire is an associate editor for Money Morning. Follow him on Twitter at @AlexMcGuire92 for the biggest crude oil price updates.
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