Lower Gasoline Prices May Inspire Splurging on Small-Ticket Items
The evidence had been accumulating for months, but it wasn't until late April that Mona Doyle noticed how much cheaper gasoline has gotten.</br></br>Ms. Doyle, a Philadelphia marketing consultant, drove up to her usual self-service gasoline pump, gave an attendant the usual $10 and began filling up her sports car.</br></br>"I began daydreaming and suddenly I had gasoline pouring out -- running all over my feet," she recalls. "Suddenly I realized, 'My God, gas prices have really gone down.'"</br></br>Almost faster than drivers could keep track, gasoline prices plunged to a U.S. average of 90 cents a gallon last month from $1.20 a gallon in January, all grades included, says the Lundberg Letter, a North Hollywood, Calif., petroleum-industry journal. In some places, the price of regular fell to about 65 cents a gallon. And although gasoline prices edged up last weekend and are expected to rise a bit more as the summer driving season progresses, they are likely to stay well below the range of last summer.</br></br>It's hard to overestimate the psychological impact of lower gasoline prices. Although the double-digit inflation that eroded consumers' spending power in the 1970s has been checked, gasoline is the first major consumer commodity to undergo sharp deflation. "It is the most powerful advertising communication to the consumer that the world is taking less away from them," says George Rosenbaum, the president of Leo J. Shapiro & Associates Inc., a Chicago marketing firm. A Shapiro poll indicates that consumer confidence rose sharply in April.