NY Times: Gas Prices Soar, Posing a Threat to Family Budget

[marmar]

By JAD MOUAWAD
Published: February 27, 2008


Gasoline prices, which for months lagged behind the big run-up in the price of oil, are suddenly rising quickly, with some experts saying they could approach $4 a gallon by spring. Diesel is hitting new records daily, and crude oil rose above $102 in trading Wednesday after settling at a record high of $100.88 a barrel on Tuesday.

The increases could not come at a worse time for the economy. With growth slowing, energy increases that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could worsen the nation’s economic woes, piling a fresh energy shock on top of the turmoil in credit and housing.

“The effect of high oil prices today could be the difference between having a recession and not having a recession,” said Kenneth S. Rogoff, a Harvard economist.

The depth of the nation’s economic problems became clearer Tuesday with the release of figures showing that prices at the producer level rose 1 percent in January from December, driven in large measure by energy costs. Compared with a year ago, prices were up 7.4 percent, the worst producer price inflation in the United States since 1981.

Other new figures showed that home prices around the country are falling at an accelerating pace, suggesting no end is in sight for the housing slump.

As of Tuesday, regular gasoline was selling at a nationwide average of $3.14 a gallon, according to AAA, the automobile club, up from $2.35 a year ago. The price has jumped 19 cents a gallon in two weeks.

Energy specialists predict that, as demand picks up further this spring and summer, retail prices will surpass the high of $3.23 a gallon set last Memorial Day weekend. That high fell short of the inflation-adjusted record of $3.40 in today’s money that was set in 1981. ......(more)

The complete piece is at: http://www.nytimes.com/2008/02/27/business/27cnd-gas.html?_r=1&hp&oref=slogin

[El Pinko]

1. I've never in 20 years driven a car that got worse than 35 MPG highway...

...and although I can't say that the increase in gas prices isn't pinching me a bit, I really don't drive all that much and my car doesn't use so much gas, so it's the prices at the supermarket that are killing me more than anything else.

When I see these people in HUGE SUV's it's really hard for me to fathom how they can waste that much money on gas. Maybe they bought before the prices rose, but man, if I had one, I would've gotten rid of it when the prices passed $2.50.


My 2000 Saturn SL gets 46 mpg. It's not cool, but Is it weird that I get such satisfaction in knowing I'm spending less than half what most people do per mile on the road?

Why do these people want to add to the oil co's profits by buying more of their product for no reason?

[Bluzmann57]

2. Good for you

But this isn't just about large SUV's and other gas guzzlers. What about the trucks and trains that move our goods from one place to another? Semis are, by their very nature, expensive to operate. I work with many owner-operators and this rapid increase in fuel prices will undoubtedly put some of them out of business. And without trucks, trains, and towboats attached to barges, America will be shut down.

[El Pinko]

3. I understand that, but consider this...

If millions of people stopped using SUV's for long commutes that could be handled just as comfortably in economy cars (not to mention carpooling & transit), wouldn't the resulting drop in demand force the gas stations to lower their prices to relieve the glut, thus lowering costs for transport, and costs of retail goods by extension?


I don't have a problem with someone who has a SUV and uses it to transport 5 kids and equipment to hockey practice 4 days a week, but a lot of people use big SUVs as a single-occupant commuter car, and that is INSANITY.

[predfan]

4. here's the kicker .............

car sales are booming in India, Russia, and China, and what do they run on? gasoline. half the people on this board could park their cars, and it wouldn't affect the price of gas. The only thing we can do is cut our own consumption.

[predfan]

5. If everyone in india who wants a car got one ( and presently 7 out of a thousand do)

there aren't enough cars in the world today to take care of them.