New York (AP) - High fuel prices are putting the squeeze on drivers' wallets just as they are starting to feel better about the economy. They're also forcing tough choices on small-business owners who are loathe to charge more for fear of losing cost-conscious customers.
Gasoline prices rose 4 percent last week to a national average of $3.29 per gallon. That's the highest level ever for this time of year, when prices are typically low. And with unrest in the
Bryon Gongaware, an owner of The Floral Trunk and Gifts in
"I don't think the economy is solid enough that you can be careless about raising prices," he said, standing among the flower clippings on the floor of the shop he has run for 21 years.
That means the extra costs that come from driving the store's delivery van 70,000 miles a year come from only one place: "right out of the bottom line," he said.
For drivers such as Robert Wagner, 51, a high school teacher from
Analysts and economists worry that by lowering profits for businesses and reducing disposable income for drivers, high gasoline prices could slow the recovering economy.
Over a year, analysts estimate, oil at $100 a barrel would reduce
Americans are less prepared to absorb the spike in gasoline prices than they were the last time prices rose this high, in 2008, because unemployment is higher and real estate values are lower, says David Portalatin, an analyst for the market research firm NPD Group.
It has been four months since gasoline rose beyond $3 per gallon. During that time, drivers have spent $14 billion more on gasoline than they did a year ago, Portalatin says.
Diane Swonk, chief economist at Mesirow Financial in
Gasoline prices rose throughout last fall as the developing nations of
In recent weeks, upheaval in the
Much of the most dramatic unrest took place in countries that are not big producers of oil. But when
Gasoline prices typically fall in the winter and rise in the spring as refiners switch to more expensive summer blends of gasoline. Since 2000, prices in May have been 52 cents per gallon on average higher than in February, according to the Energy Information Administration.
Tom Kloza, chief oil analyst at the Oil Price Information Service, believes that the normal seasonal rise in prices has been pulled ahead by events in the
"When we get over $3.75 we are looking at very serious consequences for the economy," he says.
For every 25-cent increase in the price of gasoline, the nation spends an extra $3 billion filling up its cars and trucks, Kloza says.
For Jay Ricker, who owns 51 convenience stores in Indiana that sell gasoline under BP and Marathon brands, that's less money for the "affordable luxuries" he offers - cappuccinos and candy bars that people enjoy, but can do without. "I hate these high prices," he says. "People don't want to come in and buy something I make money off."
Drivers often get angry when gasoline prices spike for reasons that aren't apparent, such as refinery problems or overseas demand for oil.
This time, though, the dramatic news reports from the
"Whenever you see chaos in the
That doesn't mean they like it.
When asked about fuel prices at a RaceTrac service station in
AP Writers Joshua Freed in