Higher Gas Prices – The Downside of an Improving Economy

Over the past three weeks there have been several major indicators that “The Great Recession” is finally starting to ease and turn the corner.

First, the Case-Shiller index showed the first month-over-month increase in home prices, the first such increase in nearly three years.  In other housing related news, sales of existing homes climbed for the third straight month.

Then there was the better than expected preliminary reading on the second quarter GDP, which showed the economy dipped at only a 1% annual pace between April and June.  Economist had been expecting the second quarter GDP to decline at 1.5%.

Finally, this past Friday, the July job report showed the economy lost “only” 247,000 jobs and unemployment actually dipped from 9.5% to 9.4%, the first such dip in 19 months.  Again, economists were expecting things to get worse, predicting unemployment would jump to 9.6%.

This is the sort of data we need to see on a consistent basis in order to know the economy has finally turned the corner and that this recession — the longest since WWII — is finally over.

That being said, it’s not as if this economic turn around won’t come without a little bit of pain, namely higher oil and gasoline prices.

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Gas Prices in Late Summer Climb

While the national average price of gasoline is nowhere near the record highs of last summer, it has been on a bit of a climb lately, jumping about ten cents over the past week, and is now at $2.63 per gallon.

At this time last year the price of gasoline was $3.84 per gallon — nearly 50% higher — so today’s average price really isn’t all that bad, comparatively speaking.

However, the glass-half-empty part of me would also like to point out that the price of gas is still $1 higher than the lows hit back in January of this year.  With the economy still kind of sluggish and the ranks of unemployed growing, even a slight increase in the price we pay at the pump can make a dent in our finances.

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$4 Gas and A Financial Mess

Whether you’re fearing for your job, or watching your retirement account get smaller with each passing day, you’ve been affected to some degree by the dramatic downturn in the U.S. economy.  You’re probably spending less money, and making an extra effort to make sure that the money you do spend goes a lot further.

Without a doubt, times are pretty tough.

Now, just imagine what it would be like if $4 gas came back and compounded the economic problems.  Would you be able to make it financially?

According to a recent poll on Daily Fuel Economy Tip, nearly three out of every 10 people would experience a severe financial hardship if gasoline prices were to return to $4 per gallon.

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Worried About $4 Gas in 2009? You’re Not Alone

The stock market is cratering, home prices show no sign of bottoming and unemployment may very well hit 10% or higher this year.

In the past six months, essentially an entire decade of “created wealth” has been erased.  Surely things can’t get much worse this year, right?

Apparently they can, says a recent poll on Daily Fuel Economy Tip.  According to a survey of nearly 300 people, nearly half expect $4 gasoline to return during 2009.

The poll asked “When do you think gas will return to $4/gallon?”  Here’s how the responses broke out:

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Gas Prices Creeping Back to $2

One of the few silver linings of our currently pitch black economic cloud was the fact that the price of gas had fallen from this summer’s record highs to levels not seen in over five years.  For those of us struggling to make ends meet, the quick decline in the price of gas couldn’t have been better news.

Unfortunately, it looks like the break on gas prices may end up being short-lived.

Since the first of the year, the national average price of a gallon of regular unleaded gasoline has climbed nearly 20% — from $1.61 to $1.92 — and with the summer driving season right around the corner, it seems unavoidable that prices will climb even higher.

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Oil Demand Down .25%, Price Down 56%. That’s Odd.

Without a doubt, 2008 was a crazy year for oil and gasoline prices.  Not only did both oil and gasoline hit record high prices — $147 per barrel and $4.12 per gallon, respectively — but both also managed to fall to five year lows.

When looking at the year in total, from January 1 to December 31, the price of oil fell from roughly $100 per barrel to roughly $44 per barrel, or about 56 percent.

Obviously, it is pretty abnormal that one of the world’s most valuable natural resources would lose over half of its market value.  The only real and logical explanation behind the drop in price would be an equally dramatic decrease in world wide demand, right?

Well, in this case, wrong.

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Gas Prices Spike, Sign of Things to Come?

Over the past five days, the national average price of a gallon of regular unleaded gasoline has climbed more than 11 cents, to just over $1.75 per gallon.  The last time the price of gas was this “expensive” was back on December 3.

Although, compared to last summer, I think most of us are willing to live with this relatively mundane price increase.

Most, if not all of the jump in gas prices can be contributed to the fact that the price of oil had climbed from the low $30s just a few weeks ago, to yesterday’s closing price of just under $50 per barrel.

However, today the price of oil fell over 12% to under $43 per barrel thanks to a government report showed a larger than expected increase in crude inventories.

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Be the Expert – Where Are Gas Prices Going?

Back in July, when the price of gasoline was well over $4 per gallon and the price of oil was nearly $150 per barrel, I said on this site that I believed the price of gasoline would never again fall below and oil would never fall below $120.  Turns out I was wrong.

Obviously, I received a lot of heat from plenty of readers, telling me my predictions were completely off base and foolish.  While the predictions in fact turned out to be wrong, I guess I can take solace in the fact that I certainly was not the only person to make such predictions.

Now that gasoline prices have fallen significantly, I thought it would be a good time to put many of you to the test.  So, for the past week, I’ve had a poll up on this site so that you all might have the chance let me know where you think prices are headed.

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Gas Prices Bottoming Out? Who Knows?!?

After hitting a nearly five year low of $1.63 per gallon, the national average price for a gallon of gasoline has crept up ever so slightly the past couple of days, and now stands at $1.67 per gallon. 

However, with the economy seeming to get worse with each passing week, nobody really seems to care about or have noticed what many experts believe is the potential bottoming of gasoline prices.

Currently, every state in the continental United States is reporting an average gas price below $2 per gallon, with Utah and Wyoming reporting the lowest average prices at $1.42 per gallon.  New York currently has the highest state-wide average price at $1.91 per gallon.  Both Hawaii and Alaska are reporting average prices just under $2.50 per gallon.

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Will President Obama Get Alternative Energy on Track?

As part of Barack Obama’s message during his Presidential campaign, he promised to help modernize and green America’s energy and transportation systems.  (Click here and here to see what Obama promised on the trail.)

Now, after the election, President-elect Obama is pushing alternative energy as part of his expected to be many hundreds of billions of dollars stimulus package.  According to the Obama camp, not only will the push towards alternative energy and more fuel efficient vehicles help protect America from unstable oil producing countries, but it will also help to create and save millions of non-exportable jobs within our borders.

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