The price of gas is trending toward $4 per gallon, as some areas are already over that mark. Image from Wikimedia Commons.
There are few things that affect consumer sentiment like the price of gasoline. The cost of gas going up by 5 cents can almost incite riots, and the cost of a gallon of gasoline is trending toward $4 per gallon.
Practically the lynchpin of American economy
There are few things that can deliver as crippling a blow to people’s finances than rapidly increasing prices of gasoline. If the cost of houses goes up, people can simply keep renting. If the cost of new cars goes up, people can just buy used and still be alright.
[Higher gas prices also cause some people to get a cash advance to fill their tank]
Almost nothing cuts deeper than runaway gas prices. According to the Washington Post, research indicates that consumer spending tends to shrink in the face of gas prices. The oil embargo of the 1970s was devastating and the gas price spike several years ago caused the car industry to re-examine its priorities. Gas prices are on the rise again.
California already more than $4
According to the Los Angeles Times, the average price of a gallon of gas in California recently reached $4.031 per gallon, after staying below that mark after a spike in early 2011. In fact, according to Time Magazine, California is also joined by Hawaii and Alaska in the $4 per gallon club. However, these states are also affected by higher taxes on gas and being further from the chain of supply.
Gas prices have been on the rise for some time, as the Energy Information Administration has reported a 29 cent increase since December, according to the Washington Post. On Jan. 1, according to Reuters, the national average for gas was $3.32 per gallon. According to Time, the AAA reports the national average is currently $3.57. Prices typically drop in February as demand is lower.
Part of the increase has to do with market speculation. Iran recently announced it was canceling sales to France and Britain, causing investors to be less confident in supplies, driving up the market price. Granted, the United States imports little oil, overall, from Iran, but instability in the market does drive up prices.
Could be $5 in some places by summer
Most outlets are reporting that gas prices are going to continue to rise. Though some areas are still selling gas for less than $3 per gallon, high-price areas such as California, Hawaii and Alaska may hit $5 per gallon by April.
The Los Angeles Times website has a picture of a gas station advertising regular unleaded at $4.93 per gallon. The rest of the nation may hit an average of $4 per gallon.
Sources
Reuters: http://www.reuters.com/article/2012/02/18/us-usa-economy-idUSTRE7BM0AB20120218
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