The title represents a double entendre: if gas (NYSE:UGA) prices rise again in the first half of 2102, will drivers simply pull back and drive only when necessary, and, are much higher prices an erroneous prediction? More importantly, would higher prices seriously impair the fledgling recovery?
Don’t Miss: Iran’s Threat Pushes Oil Prices Higher.
AAA statistics on Monday showed that the average price in the U.S. for a gallon of regular unleaded ($3.39) is some 30 cents higher than on the same day in 2011. This statistic, facing threatened attempts by Iran to close of the Strait of Hormuz, has some forecasters noting the strong upsurge of crude oil (NYSEARCA:USO) prices recently, plus increased demand due to the ongoing recovery, and concluding that gas prices could hit $5.00 in some areas by Memorial Day. One only has to remember how quickly the crisis in Libya produced price spikes last year, to realize how much more serious the new situation and its ramifications could be. Whether or not the worst will happen is unknowable now without a working crystal ball, but it is possible to make some observations on the likely short and long term effects to the economy.
Over the years, consumers get used to …
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