“Every 10-cent rise per gallon in gas prices costs the US economy $11 billion....Probably the most affected by the run-up in gasoline prices are the very poor….A lot of Americans live paycheck to paycheck, and these prices are hurting them hard.…This rise in fuel price is a negative for the economy.”
3/5/2012, “Gas prices: How much will they hurt the economy?" csmonitor.com, Ron Scherer
“How might that affect the modest economic recovery? Here’s a clue: Every 10-cent rise per gallon in gas prices costs the US economy $11 billion.”
“The fragile American economy [in 2012] has been painstakingly nursed back toward health with a variety of remedies, ranging from zero percent interest rates and extended tax cuts to the bailout of Detroit and controversial stimulus spending on roads, teacher salaries, and clean energy projects. Now, soaring fuel prices are threatening to undo it all.
Almost everyone from consumers tanking up the family car to the local pizza deliveryman to giant companies with fleets of cars is feeling it in the wallet as the national price of gasoline heads closer and closer to $4 a gallon….
For every 10-cent increase in the price of a gallon of gasoline, it costs the economy about $11 billion. By the end of February the price was up 36 cents for the year….
Probably the most affected by the run-up in gasoline prices are the very poor, says Mr. Christopher [an economist with IHS Global Insight in Lexington, Mass.]…
“A lot of Americans live paycheck to paycheck,” he says. “And these prices are hurting them hard.”…
“This rise in fuel price is a negative for the economy,” says John Silvia, chief economist at Wells Fargo Securities in Charlotte, N.C. “The reality is transportation gets hit and the cost of goods goes up.”
The hardest hit? Those drivers who live in the poorest states and those who travel the longest distances….However, the price of gasoline has probably risen fastest in California. Since Jan. 1, the price of regular gasoline in the Golden State is up 61 cents a gallon.
For the nation as a whole, some economists now anticipate the price of gasoline at the pump will exceed $4 a gallon by Memorial Day the official start of the summer driving season….
How much would that hurt the economy?
Mr. Zandi [chief economist at Moody’s Analytics in West Chester, Pa.] says this could result in the loss of 500,000 jobs.…
But even if gasoline prices were to level off at current levels, there could still be an adverse impact on the economy. For example, since the beginning of the year [2012], the price of gasoline in North Carolina has increased about 31 cents a gallon. Because the average household drives 88 miles per month, this is an additional monthly outlay of $27.28 since the start of the year.
“That is the equivalent to a meal out for us,” says Seth Gross, owner of Bull City Burger and Brewery in Durham, N.C. where a burger costs $6.25….
“We’re getting fuel surcharges from the people who deliver our food, our wine, our grain,” he says. “So far, we’ve had to absorb those increases, but if they don’t go back down, we’ll have to adjust our prices on the menu.”…
Small to medium-size businesses are particularly vulnerable, says Chris Christopher, an economist with IHS Global Insight in Lexington, Mass. “They really don’t have the pricing power to negotiate with the big companies, such as FedEx or UPS, and since their customers are feeling the same pinch, they can’t pass on the increases,” he says.
That’s what is happening to Lonnie Pollock, owner of Pollock Paper and Packaging, a distributor of janitorial supplies and paper products in Grand Prairie, Texas. The sharp rise in fuel prices last spring sent the annual fuel bill for his fleet of 100 trucks up by $500,000. This year, he estimates his fuel costs could rise by as much as another $1 million.”…
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