Average fuel prices in the United States spiked six cents overnight late last week. Fuel costs on average rose 12 cents in the week from February 20-25. A sustained trend in increasing gas costs is forecast as oil futures continue to rise . Economists warn that an oil price shock could be a major setback to the U.S. economic climate as a weak recovery struggles to gain traction.
The height of gas costs
Oil prices going up has led to a huge increase in fuel costs, which is the largest one day increase since 2008. The highest level of oil price has been hit since Oct 2008 at $98 a barrel Friday and $103 a barrel the day before that. There has been a 10 percent increase in just the last week. Pump prices vary widely in different states, depending on the gasoline tax. With $3.757 per gallon of gasoline, Hawaii led the U.S. About $3.014 per gallon was paid in Wyoming. Energy experts expect fuel price increases, which lag behind oil price increases, to continue. Oil costs might go up in the next few weeks drastically. Moody’s Analytics expects it to go up another 37 cents a gallon on average.
America's petroleum ball and chain
Several are expecting the unrest and demonstrations in Libya might spread throughout the Middle East to several oil-producing countries which means more are willing to buy oil futures causing gasoline and oil prices to go up. For every $1 increase in the oil prices, there’s typically a 2.5 cent per gallon increase in gas, claims Moody. Economists estimate that each 1-cent increase in gas costs siphons $1 billion a year away from consumer spending. About a quarter of the $120 billion payroll tax cut that Congress prepared on stimulating the economic climate with can be spent on gas if oil costs stay at $90 a barrel in 2011. Spending money on fuel doesn’t help the United States economic climate. Generally it goes someplace else. The money goes to the oil-producing nations. Usually these are the countries where the government lives off of the riches while the individuals starve.