Thursday, December 30, 2010

Gas price rise may thwart economic recovery

From Jaclyn Trop and Christina Rogers of The Detroit News on Dec. 30:
Gas prices are spiking again, setting off new fears for the economy even as it heads toward recovery.

Gasoline costs $3.13 a gallon in Metro Detroit and Michigan — up 23 cents from last month and 46 cents or 17 percent from the same time a year ago, according to AAA Michigan. It's the highest price in more than two years — since mid-October 2008.

The economic recovery could spark demand for oil worldwide, pushing it past $5 a gallon by 2012, former Shell Oil executive John Hofmeister said this week.

While oil analysts and economists disagree with Hofmeister's projection, they agree the price of gas will keep increasing and that the buck won't stop at the pump. Petroleum's rising cost would push up the cost of consumer goods, commuting and vacations.

The trend may not only cause drivers to buy smaller vehicles than they now own, but it eventually could threaten the economy.


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