Tags: gas | prices | consumer | spending

Gas Prices at 6-Year High May Dent Consumer Spending

By    |   Thursday, 03 July 2014 10:53 AM

Gasoline prices stand at their highest level for the July 4 holiday since 2008, and that could put a damper on consumer spending, which accounts for approximately 70 percent of GDP.

Regular gas prices averaged $3.67 nationally Thursday morning, up from $3.48 a year ago, according to AAA. The military conflict in Iraq has pushed up oil prices, which in turn have boosted gas prices.

As for the impact on consumers, drivers "might cut back on other things, like shopping or dining or going out," Michael Green, a AAA spokesman, told The Wall Street Journal.

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An elevated gas price "really just affects their budget, and the amount they can spend on everything else when they're traveling."

That's not good news for an economy that is seeking to rebound from a 2.9 percent contraction in the first quarter.

Carla Coleman, an unemployed social worker in Los Angeles, told The Journal that paying for gas to drive to job interviews is crimping her spending.

"Last night, I drove to Hollywood for a free jazz concert, and my mom told me not to go because I'm using her gas card. I'm more aware of where I'm going and how much I'm spending," she said.

Gas prices would be even higher if not for increases in U.S. crude oil and refinery output, experts told CNBC.

The Energy Information Agency estimates U.S. crude production will average 8.4 million barrels per day this year, up 14 percent from 7.4 million in 2013.

"If we didn't have the domestic shale oil boom, right now the noise from Iraq and the problems with Libya, Sudan, Nigeria [mean] we'd be paying regularly over $4" for gas, Tom Kloza, oil analyst with GasBuddy.com, told CNBC.

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Economy
Gasoline prices stand at their highest level for the July 4 holiday since 2008, and that could put a damper on consumer spending, which accounts for approximately 70 percent of GDP.
gas, prices, consumer, spending
307
2014-53-03
Thursday, 03 July 2014 10:53 AM
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