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Record US Gas Prices Won't Stop (Analysis)

2022-03-08T22:15:59.436Z


Americans are facing a new phase of economic anxiety due to the relentless rise in gasoline prices. Gasoline reaches record price in the US 1:02 New York (CNN Business) -- As the world enters the third year of the pandemic, Americans are entering a new phase of economic anxiety -- an inescapable reality presented to them in big numbers on the myriad signs throughout. along the highways of the country. Record gas prices are here, just as many people are planning their summer road trips or head


Gasoline reaches record price in the US 1:02

New York (CNN Business) --

As the world enters the third year of the pandemic, Americans are entering a new phase of economic anxiety -- an inescapable reality presented to them in big numbers on the myriad signs throughout. along the highways of the country.


Record gas prices are here, just as many people are planning their summer road trips or heading back to the office for the first time in two years.

This could create an especially difficult problem for lawmakers, since inflation is running deep into the fabric of American life.

Although gasoline represents a relatively small part of total consumer spending, these prices reinforce a broader sense of pessimism that could end up holding back spending.

The average price of a gallon of regular gasoline reached an all-time high of $4.17 on Monday, surpassing the previous record of $4.11 per gallon that had stood since July 2008. Prices were already high due to the supply shortages before Russia invaded Ukraine two weeks ago, but prices have soared as the oil industry has rejected crude from Russia.

For most Americans it is difficult, if not impossible, to ignore this impact.

In the short term, at least, you can't easily adjust the amount of gas you need to get by.

  • Oil is up 60% this year.

    How much can prices go up?

"You could buy another type of vehicle or come up with other transportation options, but in the short term, you're stuck with gas prices," says Carola Binder, an associate professor of economics at Haverford College.

"This is just going to mean you have less to spend on other things."

It remains to be seen whether rising gasoline prices will affect consumer spending.

February's consumer price index, a key measure of inflation, is due out later this week, though it won't reflect the most recent spikes in response to Russian aggression.

However, an index released by the London-based ICE Benchmark Administration showed that Americans' full-year inflation expectations are rising in response to the Ukraine invasion.

As of Monday, the expected pace of consumer price increases over the next year rose to more than 5%, up from 3.5% in early February.

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President Joe Biden announced Tuesday that the United States would ban imports of Russian oil, a dramatic escalation of sanctions aimed at punishing the Vladimir Putin regime that could further disrupt global commodity markets.

Although the United States consumes little Russian oil, the move raises the possibility that European countries, Russia's main oil market, will follow suit.

Biden was direct in explaining how the measure will affect the pockets of Americans.

"Today's decision will cost us here at home," he said.

"Putin's war is already hurting American families at gas stations. With this action it's going to go up more."

When it comes to inflation, psychology matters.

If consumers expect prices to rise, they spend more in the short term, fueling demand, which drives prices higher still, a cycle that can be difficult to break, especially when the source of price increases is in headlines daily.

  • Inflation, tariffs and the "shock" in energy prices

"Sometimes people don't really know why gas prices are going up, but this time people know it's because of this war," says Binder.

"The ban on Russian oil imports is important and fair, and hopefully most people will see it as worth the higher price at the pump."

The rise in gasoline prices looks like the start of a grim third chapter in the pandemic era: 2020 brought the deadly virus;

2021 the devastating economic aftershocks;

and 2022 marks the start of Europe's biggest ground war since World War II, which is compounding the pain of previous crises.

And that reality will affect us all every time we drive.

gasoline hike

Source: cnnespanol

All news articles on 2022-03-08

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