Gasoline prices have risen 21 cents in a month. Prices are higher in most states, as the average price of a gallon of regular nationwide has reached $2.27, according to GasBuddy. At least the level is down from a year ago, when the price per gallon was $3.36. However, if the rise continues, the benefit to consumers will fade.
Only four states have average gas prices below $2 a gallon. These are Utah at $1.93, Idaho at $1.94, Montana at $1.97 and Wyoming at $1.99. However, the population of these states only totals 6.2 million, which is less than Indiana’s.
People in most of the largest states pay among the highest prices for gas. The largest state, California, has an average gas price for regular of $2.82, the second highest among all states, trailing only Hawaii. California’s population is 38.8 million, first among the states. The price in New York, which has a population of 19.7 million, is $2.36. In Pennsylvania, with a population of 12.8 million, the price is $2.41, and in Illinois, which has a population of 12.9 million, the price is $2.40. Among them, the four states have over a quarter of the U.S. population.
As gas prices rise, particularly in the largest states, the so-called tax cut for the middle and lower classes starts to evaporate, which may well put a drag on consumer spending. This “cut” has been pegged as high as $100 a month, and it does not include a fall in heating oil.
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Any further rise could put a damper on first-quarter gross domestic product, which has been forecast as high as a 3% improvement. Weak forecasts of 2015 results from many large public companies have already triggered concern for national economic growth.
The presumption is that consumers will take much of their newfound money and put it into consumer spending. That may not be true, at least to the extent some people will have savings. However, Americans did begin to open their wallets, based on data from late last year. Higher gas prices could close them again.
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