Rising gas prices hit the pockets of Americans - March 14, 2008
Gas prices already top $4 a gallon at many stations.
The slow and seemingly inexorable rise in gas prices over the past two years has reached a fever pitch in recent months. That’s taking its toll on many Americans, especially when coupled with weakness in the housing market and increasing costs for things like groceries. Faced with paying more at the pump, some say they are cutting back on restaurant outings, shutting off cable or Internet access, paring clothing budgets and even scrimping on necessities such as food.
Economists say there’s no doubt that Americans are tightening their budgets.
“There’s less consumption going on,” said Brian Bethune, U.S. economist with Global Insight. He cites a slight decline in gas consumption and a steep pullback in spending on automobiles.
Bethune also suspects that more Americans are substituting higher-priced goods with cheaper ones — choosing McDonald’s coffee over Starbucks, for example, or hitting a bulk warehouse chain such as Costco or Sam’s Club instead of a pricier grocery store.
The situation could get worse soon. Prices at the pump have been pushed to levels many couldn’t conceive of even a year ago, and analysts and the Energy Department are both expecting the cost of gas to rise even further this spring and summer.
For many, obligatory commutes and a lack of public transportation make it tough to cut back much on the one thing that could make the most difference — driving itself. Still, faced with paying $3.50 or more per gallon, some Americans say they have been forced to drop their cars altogether, or at least to reduce trips to the mall or even grocery store.
Leave a Reply