Economists and the media continue to say that no one can predict when the price of gas will hurt consumer spending, damage business profits, and slow economic growth. There is no need to worry any longer. The time has come.
Gasoline prices nationwide are up 2.7% in that last week to $3.685. It is not so much the price that does damage, it is the blow to the consumer and business owner when he sees prices rise so quickly
The problem is worsened because gas prices are close to or above $4 for regular in the most populous states of California, New York, Illinois, Indiana, and Michigan. Those states hold nearly half the nation’s population. Most of these regions also suffer from unemployment which is above the national average
Brent crude as moved above $121 today. That does not mean gas prices will rise as fast as oil. There are refiners and other middle men between. If 2008 is any indication, however, gas will be $4 this summers.
The press continues to talk about relief. The war in Libya can only go on so long. The same statement was made about Iraq a generation ago. Nigerian politics will stabilize. Unrest cannot move to Saudi Arabia. China has begun to “tap the brakes” on its economy. Consumers do not believe that any of that will matter, if any of its happens. The age of $4 gas is barely three years ago. More people remember that than who the president of Egypt was for 31 years.
Douglas A. McIntyre
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