Gasoline prices for Memorial Day will reach a two-year high, according to data from the AAA Fuel Gauge Report. It is not clear at all what, if anything, this will do to the economy. So far, the rapid fall and rise of gas prices during the past year have had little discernible effect on consumer behavior. That will continue for the balance of the year, unless the upward swing becomes more violent.
The organization reported:
Today’s national average price for a gallon of regular unleaded gasoline is $3.65. This price is seven cents more expensive than one week ago and 14 cents more than one month ago. The seven-cent weekly increase is the largest such spike since February and today’s national average price at the pump is the highest since March.
Much of the increase is due to oil prices, AAA management says. Since oil has continued to tick up toward $100 a barrel, there may not be relief through the balance of the summer.
AAA and other organizations put out estimates of how many people will travel on summer holidays, primarily on Memorial Day, the Independence Day and Labor Day. So far, there have been no dire predictions of sharp drops. If other consumer behavior is any measure, there will not be much change. So far, higher tax rates and persistent unemployment have not overwhelmed consumer spending. Road trips are relatively cheap, particularly in world in which purchases of expensive new cars and new or old homes have picked up. A surge in consumer spending has relegated gasoline prices to a back burner. That was not the case a few years ago, especially in 2008, when the recession was vicious and gas prices moved toward $4.
If Memorial Day is a reasonable litmus test, so far the consumer economy continues to hold its own, and may even have gained speed. A few cents a gallon more does not matter.