February of this year we are witnessing high gas prices never seen before. The national average is $3.53/gallon. Since January, prices nationally have risen by $.25. By late April, gas prices could be $4.25/gallon. Gas prices have risen due to the cost of a barrel of oil. Foreign oil is up to $119 a barrel. The fear is that a continued rise in gas prices could curtail the recent improvement in the economy. Increases in gas prices will effect everything from food, clothing, consumer spending and just the general cost of living will rise in proportion to gas prices. This will also have an effect on employment as unemployment figures have just started to drop within the past month. According to the AP article (linked above) a 25-cent jump in a gallon of gas would cost the U.S. economy an estimated $35 billion. Now, that doesn't sound like much when you consider GNP of the U.S. economy. But, this economy is still weak. Any jump in cost of gas will have a dramatic effect. It will also have a dramatic effect on President Obama's reelection chances. Of course, the reason for the rise in gas prices is due to tension in the Middle East. Iran has threatened to block the Strait of Hormuz. One-fifth of the world's oil comes through this waterway. The U.S. has threatened Iran with war if they block this vital passage for oil tankers.
In my area, on the gulf coast, gas prices have risen quite a bit. We are over the national average right now with $3.59/gallon gas. There are some spots selling gas about $3.50/gallon. But, those are few and far between. This means that there will be few spring-time vacations for college kids who ordinarily flood Florida during Spring Break. Airline ticket prices will also increase unless gas prices start to drop. But, the thought right now is that gas prices will peak at $4.25/gallon at the end of April. That would break the record of $4.11/gallon in April of 2008. I don't see how they can make an estimate like that with war seemingly imminent between Iran and Israel. If war does break out in the Middle East, we will wax longingly of the days of $4.25/gallon gas. I have seen predictions of $10/gallon gas. Yes, this has been predicted before. But, those predictions did not have the worry of a Middle East war pushing the price of gas. The fear is that we will once again see long gas lines and gas stations with signs stating "No Gas." That is something everyone should fear.
Subscribe in a reader