Gas Prices Rise Again, But There Are Some Interesting Upsides

(MoneyWatch)  Gasoline prices are going up again, and that will cause widespread hardship as people already stretched by hard economic times are forced to tighten their belts one more. But there are some hidden benefits to high gas prices, not least that they result in dramatically lower gasoline consumption nationally.

As Rick Newman of U.S. News reported in his 2008 "Five Upsides to $4 Gas," our dependence on foreign oil ticked down slightly for the first time in 17 years when that magical price threshold was reached. Further, alternative technologies were encouraged, people drove more carefully, and traffic was reduced.

Paradoxically, high fuel prices are probably a prerequisite for the successful introduction of electric cars, and that's why many auto executives -- including such EV advocates as Bill Ford -- have called for a rise in gasoline taxes. The first few EVs will be on sale at the end of the year, and the companies are getting nervous that cheap gas will undercut their appeal. At a U.S. Senate hearing last month, several called for the feds to buy fleet cars to offset what could be a demand shortfall (some see four million capacity, but two million orders).

This week, the price for benchmark West Texas Intermediate crude oil was up past $81 a barrel, and unleaded gas futures hit $2.27 on a gallon on the New York Mercantile Exchange.

The per-barrel price is the highest since October of 2007, and soon after $3 at the pumps was evident. The Associated Press reports this week that we'll see an average of $3 per gallon this spring, and that price is already evident at some retail stations.

Prices are now near the 2010 high of $2.7583 per gallon, set on January 14. At then end of the day Friday, the Department of Energy's retail gasoline price hotline pegged the national average for a gallon of self-serve unleaded at $2.72 per gallon. A chart of retail prices show them up in every region of the country since last week.

The high prices come at a delicate time for the economic recovery, when many Americans are still struggling with pay cuts and longer commutes. And ironically economists cite better economic data as one reason for the higher prices.

The high prices have not yet registered widely with the public, but they're likely to soon, and maybe as early as this weekend:

One motivator for higher prices in the short term was the Chilean earthquake, which shut down two oil refineries because of power outages.

Photo: Flickr/AJGazmen