Gas Prices May Stall The Economic Recovery

Mortgage Rates Also On The Rise, Slowing Needed Spending Just As The Economy Begins To Wake Up

(CBS)  Gas prices have been steadily rising in this country in recent weeks - echoing a spike last summer. They jumped another 17 cents in two weeks to a national average of $2.66 a gallon.

Could costlier gas - along with costlier mortgages - slow the economic recovery? CBS News correspondent Priya David reports.

Al Pankin's U.S. Auto School has been teaching Brooklyn how to drive for 65 years - or since gas was 36 cents a gallon.

But for his fuel-intensive business, when gas prices go up, profits go down.

"It's just going out the tailpipe of the car," Pankin said. "We're guzzling gas! The car is always in low gear - it's never on a highway, where if a cars supposed to get 25 miles to the gallon, we're getting 13. We're getting half."

Many small businesses and consumers are feeling the steady creep in the price of energy. Oil prices have doubled since the winter - from $34 to $72 a barrel.

And gasoline prices are up from a nationwide average of $1.62 a gallon in December to $2.66 this week, with parts of the country seeing $3 a gallon and beyond.

In part, the spike is seasonal, but it's also being driven up by investors who believe the economy is starting to improve. However, those higher prices could slow down the pace of any recovery before it even gets off the ground.

"When oil process dropped from $148 barrel down to under $40 a barrel, it added about $250 billion to house hold purchasing power in the United States," said David Wyss of Standard and Poor's. "The rise in oil prices over the last three months, has taken about a third of that back away."

High gas prices have discouraged Al Pankin from expanding.

"I have put a hold on hiring any new employees in my office," he said.

Another worry - rising mortgage rates. The interest rate for a 30 year fixed mortgage climed from about 5 percent to a peak of 5.81 percent in just two weeks - still historically low, but a spike which could cut off a burgeoning resurgence in the housing market..

"People are still a little concerned about their jobs, about the state of the economy right now," said Jay Bryson, a global economist for Wachovia. "I don't see them rushing out and buying a house. Perhaps they decide to wait until rates come back down again."

Like the price of oil, many believe the rise in mortgage rates reflects a resurgence in economic activity. But analysts warn if the costs to consumers and business increase too much, an already weak economic engine will stall.

[John_Merritt]

Uh, yeh. Its going to mess with the 'economic recovery'. Europe has been paying $5.00 and above for many years, and they have smaller cars, they still have money to spend, and they seem to survive. How can that be? Because they are smarter than you dummies.

[johndevinejr]

I hope it gets to $5.00 a gallon, uh, who's in bed with the oil companies now, who stopped all the exploration?...Who stopped the turbine farm off the coast of Cape Cod?..Who is preventing the installation of the solar panels in the Mohave desert? lmao Who?
Posted by brownnosingmedia at 8:32 AM : Jun 15, 2009

It is entirely caused by speculation. It is manipiulated by the the oil companies and has nothing whatever to do with market forces.

[pw08-2009]

It's the SPECULATORS stupid!!!

[drputt45]

No problem here. As soon as my bailout money shows up, I'm filling the tank and taking the family on vacation. Gotta keep the economy going, so we're seeing the USA.

"O" when is my bailout money gonna get here?

[despido]

Nazi Fascist Bush, Nazi Fascist Cheney, The Political Criminal FBI
Fabricated Reports - Intentionally Delivered to the American people
In order to- Falsely and Fraudulently - Advocate a War ! !
++++++++++++++++++++++++++++++++++++

Great rant - a real genius at work.

Of course the war is over oil - and access to it. War was waged over the oil fields back in WWII. That's why Obama has such an interest in the Mid-East. Otherwise - nothing that happens there would - or could - concern us. Republican or Democrat - the motive will be to secure that oil for YOUR gas tank. Want it to stop? Park your car!

[hclinton2012]

The LOSER of a President Obama banned all exploration of Oil and Natural Gas in America and Offshore? That is why oil is going toward $200.00 per barrel, this JOKE of a LOSER caused the rise in price and now any recovery in this weak ecomony will be undone! What a WASTE this LOSER of a President Obama is?

[lastdance152]

Alan Greenspan : "Iraq War - was Really for Oil"

America's elder statesman of Finance, Alan Greenspan, has shaken the :
White House - By declaring that the Prime Motive for the War in Iraq was Oil.

Nazi Fascist Bush, Nazi Fascist Cheney, The Political Criminal FBI
Fabricated Reports - Intentionally Delivered to the American people
In order to- Falsely and Fraudulently - Advocate a War ! !

It was Republican Criminal Corporate Nazi Fascist America that
Taught.. Educated and Instructed OPEC

The Republican Criminal Corporate Nazi Fascist America
Can commit any .. Crime they want ! !

The Political Criminal Justice Department will approve it !
The Political Criminal FBI will Protect it !

[lastdance152]

erasmus111

New York Daily News
Hillary Clinton, who is the co-chair of the - Senate India Caucus, has drawn
Criticism for her vocal SUPPORT of India business and her Unwillingness to
PROTECT AMERICAN JOBS

Hillary Clinton has taken Tens of Thousands of Dollars from
Companies that .. OUTSOURCE AMERICAN Jobs to India.
The India Review wrote, ?Senator Clinton Suppressed Fears in India ...

"OUTSOURCING AMERICAN JOBS - WILL CONTINUE ," Senator Clinton said

In An Interview Senator Clinton Defended Her Support of
A Company That Destroyed and Eliminated Thousands of American Jobs and
Sent them to India -
______

Hillary Clinton
President of the Young Republicans at Wellesley College

Hillary Clinton
Took an INTERNSHIP With the House Republican Caucus

Hillary Clinton
Has written - ?Democracy is still a Radical Idea,?

Hillary Clinton
Stated : "I sometimes think, I didn't leave the Republican Party,

Hillary Clinton
JOB DESTROYER .... WAGE PACKAGE DESTROYER
WORKING MIDDLE CLASS AMERICA DESTROYER
FAMILY UNIT DESTROYER
HOME OWNERSHIP DESTROYER
ECONOMY DESTROYER
CREDIT DESTROYER
DEMOCRACY DESTROYER

Hillary Clinton
The Real Judas of : The Democratic Party

Hillary Clinton
DEMOCRATIC PARTY DESTROYER

Hillary Clinton
The Other : Republican NAZI Fascist Party
Presidential Candidate

[Questionews]

GREED ON Wall STREET!!

THE FED PRINTING BILLIONS OF DOLLARS OF WORTHLESS PAPER!!!

And Obama and his crew of "advisors" can't seem to figure it all out!!!

This is CHANGE??? Or more like George W. Bush's 3rd term???

HAIL OBAMA?????
Posted by walt1944 at 7:20 AM : Jun 15, 2009


Walt
You seem to be losing faith.
How long before you start ending your posts with "Sig Hail Obama" ??

[shedhouserob]

the greedy oil company moguls not one to care about America get their greedy hands on so much money. An investigation of these grease balls just means paying off politicians so nothing done about it. We have 3 refinerys in this town and you have a 2 cent difference in price of 100 service stations. Use to be gas price wars but those that looked into have been bought off. I say regulate the oil companies. I remember the big spokeman for the oil companies said if you don't like it we'll cut down on production and then it'll cost you more at the pump. then they wonder why banks, power were all regulated.

[gunnyh1]

Wow, people still will believe anything they see or hear. The price of oil has risen due to oil speculation plain and simple. Of course the big banks that received all kinds of money from the government and in turn pay off the politicians with things called campaign donations...these banks want to divert attention and blame it on everything such as the "weak dollar" and any other lie they can put out there. We are being ripped off by these bankers that "buy" oil on paper only with no intention of taking delivery only to "trade" it to another banker to drive the price up....they are making money on nothing more then speculation....speculation that was DE regulated in 2006 under US Treasury Secretary Henry Paulson (former CEO of Goldman Sachs). Oil futures trading needs to be immeditately RE regulated but our Congress and President could care less because they are being PAID OFF! If they ignore this and let it continue then they are nothing but CORRUPT.

[walt1944]

There is a concern that higher gas prices, together with higher prices for everything else, will slow what is turning out to be a CORPORATE economic recovery, NOT an economic recovery for the average out-of-work person.

We are being given the same old reasons as to why prices are going up. Gas is going up because oil companies are making "summer blends". Because fuel prices are going up, it costs more to get items to the stores, who naturally, pass this cost on to the consumer. God forbid it should affect THEIR bottom line! Mortgage rates are going up because it costs more for bankers and mortgage brokers to climb into their cars and drive to work, and this cost too is being passed on to the consumer. God forbid it should eat into their zillion dollar salaries!!!

We consumers know the REAL REASONS why prices are going up!

GREED ON Wall STREET!!

THE FED PRINTING BILLIONS OF DOLLARS OF WORTHLESS PAPER!!!

And Obama and his crew of "advisors" can't seem to figure it all out!!!

This is CHANGE??? Or more like George W. Bush's 3rd term???

HAIL OBAMA?????

[despido]

Oil is valued in dollars, as the dollar falls in value the price of oil rises. Its not rocket science - or a conspiracy. Obama's massive increase in debt worries dollar investors (those that loan money to the U.S.) so the dollar fell - oil rose. This demand for debt has now caused interest rates to rise, which will temporarily increase demand and support the dollar. AS the dollar rises oil prices will now begin to fall - but only temporarily. The huge and ever-expanding debt is much more of a threat, the resulting higher interest rates will push up mortgage costs - killing the 'recovery' is a real risk.

[nolies74621]

I was stationed in Italy in 1988. And even back then, gas there was $6.50 a gallon.
Posted by charlie929 at 6:35 AM : Jun 15, 2009
+ report abuse + permalink


It stiil is. I am living in Germany, gas is 1.39 Euro a liter, that is about 6 dollars a gallon. I work for the DOD and buy my gas through AAFES and I am paying about 2.44 a gallon, but the tax on gas is what raises the cost..you know the Value Added Tax that all European countries have to pay for their socialized health care. Is'nt there a Value Added Tax being lauded by BHO? Get ready America, socialism aint cheap.

[DaVicar5]

Why can't competition and free enterprise come up with a competitive alternative? Why does it need the government's god damned welfare? -------------- Posted by charlie929



Which form a free enterprise are you talking about? The Government owned banks, the government owned car companies, or the government owned mortgage industry?

[DaVicar5]

Even today the government is dragging its feet as oil executives are strangling us economically and literally. ----------------- Posted by quickly101



Those Oil Executives happen to be in Al-Bama's back pocket - the apple doesn't fall far from the candy factory, Quick.

[DaVicar5]

"Al Pankin's U.S. Auto School has been teaching Brooklyn how to drive for 65 years - or since gas was 36 cents a gallon"




- Funny, I though Al Pankin was trying to steal a Senate Seat in Minnesota?

[quickly101]

We are addicted to oil. What do you expect? The big oil companies need more tax breaks according to republicans. We should have weaned ourselves off of oil by now, we have only had 35 years since the first Arab oil embargo in 1974. Our government should have started weaning us from oil way back then and investing in alternative energy sources then. Even today the government is dragging its feet as oil executives are strangling us economically and literally. But you gas hogs keep right on buying those big 40,000k king cabs to drive to the golf course and around town.

[DaVicar5]

The ones in the shadows.. the one that live in the swamp.. and eat mosquitos. The weirdos and the creeps that think they're cool.. ---------------- Posted by charlie929



The Swamp Creeps are running the Country?
How come the swamp creeps weren't running the Country when President Bush was in office?

[DaVicar5]

Obama is making all his oil freinds rich. ---------------- Posted by mrs_trepidatious



Just like we warned them back in November, Mrs. Trepidatious . . .but they wouldn't listen!