Oil prices are just below $70 a barrel, trading above $66 for the first time in years. At the start of the year, the price was $60, so the price is already up almost 12% in 2018. Since gasoline prices move nearly lockstep with oil, they are likely to sprint toward $3 soon. And there could be an effect on the consumer economy.
The average price of a gallon of regular is $2.58 nationwide. That is up 16% from $2.23 a year ago. In several parts of the nation, gas already has topped $3, based on the average price of a gallon of regular. In the nation’s largest state by population, the price is $3.27. In several other states, the price is close to $3. For example, the price in Pennsylvania is $2.86, and in New York it is $2.75.
The idea that oil could move to $80 is no longer wild speculation. Majid Jafar, the head of Crescent Petroleum, one of the largest Middle East oil companies, said problems in Venezuela, one of the world’s largest producers, could get much worse. He told CNBC that the price rise could come quickly.
At $80, the move from $60 would be 33% higher than it was in 2017. And this could happen in a matter of three or four months, if some analysts are correct. Gas prices would certainly move above $3 in some of the most populous states, many of which are in the northern tier of the United States and on the West Coast. The prices are likely to stay lower in the states near the large refineries just south of Houston on the Gulf of Mexico.
While there is no exact way to forecast what higher gas prices will do to the economy, they certainly affect discretionary spending among Americans who rely on their cars to travel for work or make other trips that require driving over long distances. Gross domestic product will be affected to some extent if gas goes to $3. There are few things likely to derail the economic expansion. A quick rise in gas prices could be one of them.