Even before the Iran deal was announced, market analysts were predicting that
lower gas prices were on the horizon. Certainly, the optimism over the Iran deal
has increased this speculation. In reality, the deal might help more Iranian oil
get to western markets, yet we know that this agreement still has to go through
the "political process." That does not stop optimism, and CNN/Money recently
published a story saying that we could see gas prices at $2.00 per gallon,
especially after the summer driving season comes to an end.Again, even without the deal being implemented, analysts were bullish on lower gas prices as world production was rising. The next question is--will that hurt or help our economy? On the plus side, lower gas prices should bolster consumer spending, while lowering the threat of inflation. This could help moderate future rate increases. On the negative side, our energy sector would be negatively affected and areas dependent upon those sectors would be hurting as well.
The overall effect would definitely be positive. We should remember that the energy sector affects all industries. There has even been a recent study that has indicated that falling gas prices can shorten the time it takes a house to sell and can increase the selling price. The study was published by Florida Atlantic University and Longwood University. We certainly understand that lower gas prices can affect demographics with more moving closer to cities when gas prices are higher. Will gas prices fall and by how much? That remains to be seen but the possibility is intriguing.
Mike Ervin
Branch Manager/Mortgage Banker
NMLS: 282715
O: 650.451-7797
C: 650.766.8500
mike@mikeervin.com
