Thanks in part to the high heating oil usage due to the record cold weather caused by global warming, oil prices are rising. One thing that helped the economy last year – or I should say, kept it from being even worse than it was – was that Obama inherited very low gas prices and they stayed fairly low last year even during the summer, at least compared to 2008.
But in case you’re living in a cave and hadn’t noticed, gasoline prices have been rising considerably. I dug around and found that they have risen by a dollar a gallon since Obama took office. That’s around a 60% rise in one year. You can see a chart of it here and play with the options. The last year is shown below. Gasoline prices now are higher than they were last summer, so Lord only knows how high they’ll get this summer. $3 in the very near future is a given. Last year they were 75-90 cents higher in the summer than at the start of the year. Could we see $3.50 a gallon by Memorial Day? $4 a gallon by 4th of July?
If people this year are spending $20-25 more per refill than they did a year earlier, how much of a beating will that put on consumer spending, and how much impact will that have on any recovery?