Consumer benefits of low gas prices go beyond the pump - WDRB 41 Louisville News

Consumer benefits of low gas prices go beyond the pump

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LOUISVILLE, Ky. (WDRB) -- After enjoying a break at the pump, consumers will benefit from low gas prices in their shopping carts as well, as experts expect food prices to drop.

"With the lower energy prices, we will probably see lower food prices in the next month or so," said University of Louisville finance professor David Dubofsky.

From farm equipment to transportation, agriculture depends heavily on oil. The industry is positioned to benefit from crude oil prices, and ultimately pass the buck on to consumers.

"It will take probably a couple of weeks, but I think by early next year, you'll be seeing lower food prices reflecting the lower energy costs," said Dubofsky.

Dubofsky says excitement at the pump is warranted, as he expects gas prices in Louisville to dip below two dollars in the coming week.

"Normally, I fill up for $50. Today, $22," said Parnell Dudley of Louisville. She filled up at the Shell station on Westport Road near Goose Creek Road Tuesday. At the time, the price of regular was $2.16 per gallon.

When we asked her the last time she remembers seeing prices this low, she responded by saying, "No, I can't, I really can't, not at all."

But when Dudley parks her car and decides to fly, she shouldn't expect to see cheaper airfare -- at least not for a while -- as airlines tend to buy a large amount of their fuel in advance.

"It's not unusual for an airline to buy 25 percent to 50 percent of its expected fuel use one to two years in advance," said Dubofsky. "So they're stuck paying higher prices."

And with only four major carriers in the U.S., Dubofsky doesn't foresee much competitive pressure to drop prices.

"They're going to be enjoying the higher profits as long as they can possibly last," he said.

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