Economists worry about rising oil prices because it tends to generate higher pump prices for Americans. With more money spent on gasoline, there’s (theoretically) less money available to spend on goods and services.
Today, GasBuddy.com says that the average price for a gallon of unleaded gasoline is $2.792, up from $2.344 last year at this time.
Now, as a country, it is estimated that we consume 146,000,000,000 gallons of gasoline annually. That converts to 400 million gallons each day.
Therefore, the 44.8-cent difference between today and last year at this time, costs Americans an additional $179,000,000 in fuel charges daily.
And this doesn’t account for premium gasoline or diesel fuel charges.
Consumer spending makes up roughly two-thirds of our economy so when gas prices rise, economists worry — it means that less money is available to pump back into businesses, and that the economy should slow down.
The good news in this type of story is that people in the market for a new home loan may benefit. A slowing economy tends to lead to lower mortgage rates.
As Hurricane Season rolls on and the post-Fed meeting chatter dies down, expect to hear more from the news on the price of oil and gasoline.