In a development that could stall economic recovery in the U.S., gasoline prices exploded in a 24-hour period starting Thursday morning, rising by as much 25 cents a gallon in some parts of the country.
"I literally came to work and gas across the street was $1.83," said Michael Fox, executive director of the Connecticut chapter of the Gasoline and Automotive Service Dealers of America. "I went to the bank, it was $1.90. I went to lunch it was $1.99," he told the Associated Press.
In New York's Long Island, pump prices for regular unleaded skyrocketed from $1.63 per gallon on Thursday morning to $1.85 on Saturday. In parts of Arizona the situation was even worse, with prices at the pump hitting a whopping $4.00 per gallon. Industry experts said the jump was due in part to the rupture of a local pipeline.
Economists sounded baffled by the massive price spike, unprecedented since the days of the 1970's oil shocks, citing everything from pre-Labor Day refinery shortages to the power outage last week that plunged eight states into darkness.
For the White House the timing couldn't be worse. With leading economic indicators finally turning around after languishing in the doldrums for three years, supporters of President Bush were hoping the economy had at long last turned a corner.
But after hovering just above the $1.50 per gallon level in the Northeast immediately after the Iraq war, pump prices began inching up in midsummer. Even before gas prices exploded this weekend, inflation at the pump had put a dent in income American families were anticipating from the new round of tax cuts Bush had fought so hard to push through Congress this spring.
The latest price hike, for instance, could cost an average family with two cars as much as $325 a year, wiping out for many the benefits of Bush's first tax cut.
Though economists seldom cite rising energy prices as the cause of the nation's economic malaise, the economy during the 1990s was given a big boost by generally stable gas prices that stayed below $1.50 per gallon in most markets.
At several points during the decade, pump prices actually approached the $1.00 per gallon level, representing a financial boon for average American families that dwarfs any tax relief now planned.
Though most experts cite the stock market bubble that burst in March 2000 as the genesis for the current economic downturn, the explosion of energy prices the preceding August took its toll on key segments of the economy such as trucking and auto sales.
If the energy price spike subsides in a matter of weeks, it's likely the economy will resume its upward course. But if the White House can't find a way by early fall to get the cost of gasoline closer to $1.50 per gallon than $1.90, prospects for a vibrant economic recovery - along with Bush's political future - could dim considerably.
Read more on this subject in related Hot Topics:
Bush Administration
Editor's note:
FREE E-mail Alerts From NewsMax.com - Click Here Now!
Print Page 
Forward Page 
