But the anxiety this engenders as to the actual impact on the economy -- on a macro basis, at least -- may be way out of whack with the real impact of rising energy costs.
I'm not downplaying the very serious problem of rising gas prices. The national gas-price average stands at $3.967 a gallon for regular, according to AAA, and it's been climbing fast. Here's the latest nifty table, courtesy of AAA:
Just as worrisome, the price of a gallon of gas has already topped $4 in more than a dozen states, according to GasBuddy.com. This doesn't just suck dollars out of consumers' pockets, it raises the prices of the goods they'd rather be buying than gas.
Most of the stuff we buy at the store gets there in the first place by truck, which, of course, uses diesel or gas. It also costs more to fuel airplanes, run railways and sail ships. And of course the rising price of oil underlying the gain in gas prices raises the costs of most consumer goods, too.
In today's crazy, modern world, everything has plastic in it. And anything made out of plastic or packaged in plastic -- from toothpaste to toys to synthetic fibers used in clothes -- it all comes from derivatives of petroleum. You know that super-absorbent material found in P&G's Pampers diapers and Huggies from Kimberly-Clark? It's called polypropylene and it's derived from oil. So if you're suffering from explosive gas pains, well, you'll likely find no relief in the price of Depends.
Now for the good news.
"Nothing seems to stir anxiety among American consumers like rising gasoline prices," says Nomura analyst David Resler in a recent report. "Sudden and unforeseen increases in gas prices force many households to curtail discretionary spending."
And yet, as Resler goes on to point out, from a macroeconomic perspective, "volume and intensity of public complaints about gas prices seems out of proportion to its role in overall spending."
Heck, for more than 50 years gas has accounted for a smaller and smaller percentage of our household budgets. And adjusted for inflation, gas prices aren't hitting our budgets nearly as much as we feel that they are, the analyst notes:
For instance, in 2010 gasoline purchases accounted for about 3.12 percent of total current dollar consumer spending, a share that is quite close to its five-decade average of 3.15 percent. Measured in inflation-adjusted terms, however, gasoline purchases accounted for just 2.80 percent of total spending -- a record low.No doubt: the effects of higher gas prices on consumer spending and consumer prices stink. They hurt the lowest income folks the hardest, are subject to wide regional variations and might slow the progress of our economic recovery.
But the fact remains that the relation between the price at the pump and the impact on our pocketbooks and the economy is not nearly so clear cut as it first seems. James Surowiecki of the New Yorker points out that gas is the only item whose price is announced in huge numbers lining the roadway. And he quotes behavioral economist Dan Ariely explaining that the way gas is pumped, we are forced to literally watch the numbers pile up, a painful ritual even at $3 a gallon.