For all of the talk about how cheap gas prices were going to help Americans build up their recession-ravaged savings and pay down their debt, it seem cheaper prices at the pump are going straight to fueling our vices.
Last month, the American Automobile Association said we had already saved more than $115 billion in 2015 thanks to cheaper gas, which works out to more than $550 per driver. This windfall has largely gone up in smoke, though — sometimes literally. Rather than saving the lion’s share of the money, we spent about 80% of it, according to an analysis by JP Morgan Chase, and most of those splurges are ones that would make your cardiologist very sad.
“The biggest share of savings is going to the sin goods: the cigarettes, the booze, the junk food,” president of retail company Customer Growth Partners Craig Johnson told Bloomberg. Tobacco giants like Altria, which had a nearly 10% increase in profits in the third quarter, are among the companies benefitting from the extra money that’s (momentarily) in our pockets.
Another beneficiary was the restaurant industry — especially fast food chains — which got nearly 20% of that extra money we spent. Some sit-down restaurant chains have also said they sold more food and booze when gas prices went down. And a survey from the National Association of Convenience Stores found that more than three-quarters of convenience store owners sold more food last year.
Many of us are gambling that the good times brought on by cheap gas are going to continue — literally. Regional casinos around St. Louis, Detroit and throughout Connecticut saw their fortunes improve in early 2015, which many observers linked the increase in business to lower gas prices.