Falling Energy Prices May Bring Needed Boost to Ailing Economy --- Savings for Individuals, Firms May Free Tens of Billions For Additional Spending
NEW YORK -- The ailing U.S. economy could soon get a much-needed boost from an unexpected source: falling energy prices.</br></br>Immediately after the Sept. 11 terrorist attacks in New York and Washington, some economists expected oil prices to rise on fears that a war in the Middle East would disrupt the supply of oil. Instead, prices of gasoline, heating oil and natural gas have all fallen as concerns have grown that a possible global recession could drastically cut demand for energy.</br></br>In the short run, those declines should act like a tax cut for consumers, freeing up funds for additional spending. They should also help cut costs at companies that have big fuel bills, including those in some of the hardest-hit industries, including airlines, trucking companies and manufacturers.</br></br>In total, the recent declines could produce "tens of billions of dollars in savings" for companies and individual users of fuel, says Tom Robinson, senior director at Cambridge Energy Research Associates, a Cambridge, Mass., consulting firm.</br></br>While that alone won't keep the country out of recession, it certainly will "act as a salve in the wounds from the recession we're in," adds Richard Berner, the chief U.S. economist at Morgan Stanley.