High Gas Prices Compete For Holiday Shoppers' Cash
STEVE INSKEEP, host:
If your holiday budget is already stretched, you are not going to like your next visit to the gas station. The national average for regular unleaded gasoline has risen to $2.98. That is the highest price ever recorded in any December. [POST-BROADCAST CORRECTION: That is the highest gas price ever recorded during the days before Christmas, when many people do most of their holiday shopping. It is worth noting that it is not the highest price ever paid in December for gas. That price was $3.00/gallon on December 27, 2007.]
It is much more common for gas to soar around the Fourth of July. NPR's Sonari Glinton looks at what current gas prices may mean for holiday shoppers.
SONARI GLINTON: The price of gas is high and may be getting higher.
Mr. TROY GREEN (AAA): We have never within the United States have ever paid $3 a gallon at Christmas time.
GLINTON: Troy Green is a spokesman for AAA, the auto club.
Mr. GREEN: I could take you to a map real quick.
GLINTON: In his office, Green shows me a map of the country and where prices are spiking.
Mr. GREEN: So you'll see that, for example, California, basically the Pacific Coast - some of the most expensive gasoline can be found in that part of the country, as well as in the Northeast.
GLINTON: With prices in those areas well above the $3 mark, that brings the national average to $2.98. Now, typically December and January are when the price of gas bottoms out. Green says he's worried the current price spike will mean even more expensive gasoline come summer.
Mr. GREEN: Right now the recovery, it's still in its beginning stages. We still don't know what $3 a gallon gasoline will mean for the economic recovery coming up in the future.
GLINTON: But wait. Before we jump ahead to summer, what do these high gas prices mean for holiday shoppers?
Ms. MURRIN BOYCAN: Oh my gosh. Just today I had to stop - 3.20 I paid. That's a lot. Last time I bought, it was like 2.80-something.
GLINTON: That's Murrin Boycan. She was in the parking lot of a Virginia Costco pushing one of those huge carts - you know, full of ginormous quantities of food and toys and such. Boycan says higher gas prices didn't affect what she put in her cart, this time.
Ms. BOYCAN: You know, we've saved and we kind of had the money put aside already. So the gas prices, I guess, hit our other, you know, just our other bottom line.
GLINTON: So the toys for her children are safe. But she's got to save somewhere.
Ms. BOYCAN: Maybe spending on my husband, and he spending on I. You know, that's where we'll cut, versus on the children. We have three kids, so versus on them.
GLINTON: The idea that consumers are going to tighten their belts during the most important retail season of the year, when inflation is already low, that worries economists. Philip Verleger is an oil economist.
Mr. PHILIP VERLEGER (Oil Economist): If they think this is going to be a permanent increase, then they may start changing their habits and cutting consumption of other goods, which is not what we want right now in the economy.
GLINTON: Verleger says consumers probably should not do that. He thinks today's higher prices are a short-term problem. An oil refinery in Canada that processes much of the gas for the Northeast shut down temporarily, pushing prices up.
Mr. VERLEGER: You know, this current price level is not likely to stick. And so there's no big concern.
GLINTON: Verleger says most importantly, consumers should not make any major changes to their budgets based on current higher prices. But while Verleger predicts prices will fall back this winter, AAA's Troy Green says he's still worried about where they'll end up this summer.
Mr. GREEN: There's a good chance that we'll see higher gasoline prices this spring and summer - the spring and summer of 2011 - than we did in the spring and summer of 2010.
GLINTON: Green says if that happens, it won't help the recovery.
Sonari Glinton, NPR News.
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