Hitting a Wall?

Posted: May 6, 2011 in Economics, Technology

The cost of fuel continues to weigh on Americans.  Last week our spot survey showed that an even forty percent of our readers said that higher fuel prices had not affected them yet.  This week the number is down to 38.7 percent.  People who said they travel less overall in these circumstances increased from 16.67% to 19.35% an increase of more than 2.6%.  These are significant changes in only a week even though the average price of a gallon of regular was up only a few cents.  It was also the week that saw petroleum futures decline by almost ten dollars per barrel so perhaps relief is in sight.

This demonstrates again that four dollars per gallon is a tipping point.  Beyond that price, sentiment changes and people aggressively try to save fuel by reducing travel.  Since fuel use and economic health run in the same direction, some economists are beginning to wonder how prices and sentiment will affect the economic recovery.  When people spend more for a commodity like fuel — that many see as a necessity — it leaves less cash in a budget for other purchases, hence the concern.

So, what did you think?

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