I am a lunatic about gas prices. I watch the gas-station marquees like a hawk, always keeping mental notes on who’s charging what. I will drive out of my way to save four cents a gallon. Even on a $10 purchase, when the difference amounts to maybe 20 cents. I don’t care. I will not overpay at the pump.
So I definitely noticed over the weekend when prices at all the gas stations in town suddenly skipped over $2 from the mid-$1.80s (and that’s in New Jersey, where gas is pretty cheap compared to most other states.) And I’m not the only one who noticed.
As I write, crude touched $60 a barrel.
How’d that happen? It’s not demand. As Newswires’ Nick Heath points out, demand projections remain bearish. No, what’s driving it is a weaker dollar and plain-old speculation, in this case speculation that the bottom’s been hit in the economy, the same thing that’s fueling gains in the stock market.
Stock-market gains will only reinforce a nascent recovery. But gains in the crude market will choke it. Think struggling consumers want to grapple with rising gas prices?
The green shoots will drown in crude. The idea that the decline in the rate of decline presages a recovery will be stopped in its tracks if crude prices keep rising.
Of all the problems that hit the economy in the past two years, the spike in crude prices was the one that just flat-out broke it. All the time crude was rising to its record high of around $145 last summer, you heard talk about the resilient consumer, the consumer who could absorb the gas prices and keep charging away. Crude hit $4 at the pump (at least that’s what it hit in Jersey) and all that talk melted away. You could hear the economy grind to a halt.
And that was in July 2008, when the unemployment rate was 5.8%. The proverbial resilient consumer has since been beaten and battered and left out in the alley. He looks like Rocky at the start of the 15th round with Apollo Creed.
It won’t take $4 gas to throttle the economy this time.