U.S. economic recovery threatened by increasing gasoline costs

On the morning of Feb. 25 average U.S. gas prices were six cents higher than at the end of the day on February 24. Fuel prices on average rose 12 cents in the week from February 20-25. A sustained trend in rising fuel prices is forecast as oil futures continue to rise . Rising oil costs are coming at a bad time for a U.S. economic climate that is depending on consumer spending to lift it out of the doldrums.

The height of gasoline prices

The jump in pump costs, the largest one-day increase since 2008, is tied to a surge in oil prices. The highest level of oil price has been hit since October 2008 at $98 a barrel Friday and $103 a barrel the day before that. There has been a 10 percent increase in just the last week. The Pump prices will change depending on the state. This is because fuel tax is different everywhere. The highest fuel prices in the U.S. were in HI. The average was at $3.757 per gallon. About $3.014 per gallon was paid in Wyoming. Energy experts expect gas price increases, which lag behind oil price increases, to continue. Moody's Analytics reports that in just the next few weeks, there can be a rise of up to 37 cents a gallon in the next few weeks in oil prices.

Gas costs go up meaning billions lost from consumers

Increasing fuel and oil costs are being driven upward by speculators getting oil futures on the bet that the popular unrest and an emerging civil war in Libya could spread instability across the major oil-producing countries of the Middle East. In accordance with Moody, gasoline is increased directly off of oil increases. There is a 2.5 cent gasoline increase for every $1 oil increase. Economists estimate that each 1-cent increase in gasoline prices siphons $1 billion a year from consumer spending. Moody’s estimates that if oil costs average $90 a barrel in 2011, spending on gasoline will eat up about a quarter of the $120 billion payroll tax cut that Congress had intended to stimulate the economic climate this year. Spending money on gas doesn't help the United States economic climate. Generally it goes someplace else. It goes to oil-producing countries where authoritarian governments hoard their riches while the people live in poverty.

Information from

CNN

money.cnn.com/2011/02/25/news/economy/gasoline_prices/index.htm

New York Times

nytimes.com/2011/02/25/business/economy/25econ.html?pagewanted=2&_r=1&src=busln

Boston Globe

boston.com/business/articles/2011/02/24/rising_oil_prices_could_slow_recovery/