Charts: Cheap Gas to Boost Retailers, Hurt Gas Stations

Surely you have noticed the money that you’ve been saving at the gas pump lately.
You’re certainly not the only one. With gas prices at their lowest levels since 2009, millions of people have more money in their pockets than they might have had several months ago.
The GasBuddy six-year gasoline price chart below illustrates the decline that led us to such cheap gas.
How does this translate to consumer sentiment?
The chart below illustrates consumer sentiment over the last 15 years, broken up by income category. For the top third and middle third of households, consumer sentiment is at its highest levels since 2007.
Cheap gas prices are affecting consumer sentiment among the bottom third of earners more significantly than it has the other two categories of earners.
In fact, consumer sentiment amongst the lowest third of earners is at its highest levels since 2005.
This is almost certain to translate to greater spending at retailers this holiday season, especially for retailers most popular among lower-income households. The holiday shopping season is shaping up to be strong, and I’d expect this impact to be most pronounced with shares of consumer electronics companies like Apple (Nasdaq: AAPL) and mega-retailers like Amazon (Nasdaq: AMZN) and Walmart (NYSE: WMT).
But cheap gas isn’t going to boost the entire stock market. In fact, sales at gas stations declined in November for the sixth consecutive quarter, the first time since 1998. The chart below comes from Business Insider and illustrates the monthly year-over-year sales of gas stations.
Owners and operators of gas stations are likely to continue feeling the pain during this holiday season, a double whammy for companies like Shell (NYSE: RDS.A) and BP (NYSE: BP) that are also involved in production. Those stocks are down 16% and 25%, respectively, in the last six months.
Cheap gas is certainly driving consumer sentiment higher and putting more money in consumers’ pockets. I expect this to drive a strong holiday shopping season and fourth-quarter earnings among retail and consumer goods stocks. But if you own shares of gas station stocks I wouldn’t expect the situation to get better anytime soon.
DISCLOSURE: I personally own shares of Walmart and Apple.

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