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February 27, 2008
Gasoline prices, which for months lagged behind the big run-up in the price of oil, are suddenly rising quickly, with some experts saying they could approach $4 a gallon by spring, according to The New York Times.
The increases could not come at a worse time for the economy. With growth slowing, energy increases that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could worsen the nation’s economic woes, piling a fresh energy shock on top of the turmoil in credit and housing.
“The effect of high oil prices today could be the difference between having a recession and not having a recession,” said Kenneth S. Rogoff, a Harvard economist.
The depth of the nation’s economic problems became clearer Tuesday with the release of figures showing that prices at the producer level rose 1 percent in January from December, driven in large measure by energy costs.
Compared with a year ago, prices were up 7.4 percent, the worst producer price inflation in the United States since 1981.
Posted by Peter C. T. Elsworth 
at 10:10 AM to Gas prices
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