Gas Prices Are Going Up Again

Just when we felt that there was some consumer relief at the gas pump, an article in USA Today stated that "Gas prices turn up, could put damper on economy". That is just what the economy didn't need as the average family already spends nearly 20% of it's budget on fuel.
The gas prices in May peaked to a national average of $3.98 a gallon. During the month of June we experienced prices falling to $3.54 a gallon. Recently prices have unexpectedly surged the past two weeks to a national average of almost $3.70, which is almost a dollar higher than levels a year ago. There are some Industry analysts that say fuel prices could climb higher in the short-term, curbing skittish consumer spending, which is the main driver behind economic growth.
"This is just dismal news for the consumer. There's a lot of fatigue already," says IHS Global Insight economist Chris Christopher, who notes consumers are fretting over jobs, a weak housing market, Europe's looming debt crisis and Washington's political impasse on the debt ceiling.
Crude oil prices reached the $100 per barrel mark again as most industry analysts expected prices would be curbed by slower seasonal demand, a broader commodities sell-off and last month's news that the United States and the International Energy Association would sell oil from strategic reserves. Of course, the strategic reserve really only amounts to a few days of supply so any relief would be very temporary.
Near-term, gas prices are likely to remain below $4 per gallon, which acts as a psychological barrier that can severely erode consumer confidence.
In the near term analysts expect fuel costs to hover between $3.50 to $3.75 per gallon. This of course could change very quickly as developing wars and events in the Middle East could threaten supply and fear could drive fuel prices upwards. The other big question mark is how will the upcoming hurricane season affect the oil markets?
Worldwide rising demand will push prices up heading into 2012. Many experts have stated that gas prices could reach the $5 gallon level by next spring. Economists have said that "The only way the consumer can win is by reducing consumption." While some people may be able to do that, it may be easier said than done. We can all eliminate many unnecessary trips but many of us commute long distances to work. Maybe the time has come for all of us to tune up our car, share rides and look at smaller cars again. High fuel prices are here to stay!