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Gas Prices, the Economy and Motorists
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Gas Prices, the Economy and Motorists

Economy

Gas Prices, the Economy and Motorists

Gas Prices, the Economy and Motorists
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The huge run-up in gas prices has had a surprisingly small impact on the economy. Stock averages are climbing, consumers are increasingly confident and motorists have yet to cut back on driving.

SCOTT SIMON, Host:

The cost of gasoline is above $3 a gallon again and many Americans are grumbling at the pump. But news coverage of gas prices can be more dramatic than the prices themselves. NPR's Chris Arnold reports that the recent uptick may look and sound like an economic calamity. But most drivers aren't letting prices get in their way.

(SOUNDBITE OF MUSIC)

CHRIS ARNOLD: High gas prices, the pain at the pump is ruining your life. Well, okay, it's not. We can turn off the music and stuff. Turn it off.

NARAMIN BERAVESH: It's really not hurting that much yet.

ARNOLD: To talk about what's really going on with gas prices, I met up with Naramin Beravesh(ph) at a gas station in Lexington, Massachusetts. He is chief economist at Global Insight, an economic forecasting firm. But as we get talking here, the gas station owner, Paul Mickelizzie(ph), comes over to tell us what he thinks.

PAUL MICKELIZZIE: If (bleep) could fly, this place would be an airport.

(SOUNDBITE OF LAUGHTER)

ARNOLD: Mickelizzie says he's sick of watching people come out of Dunkin Doughnuts and Starbucks up the street with coffee and bags of pricey snacks, then pull in here and complain about high gas prices.

MICKELIZZIE: Go over there, they're all coming out with lattés, fattés, mattes, $4.50 a piece, $20 worth of coffee. Do the math on the martini, seven to 12, what do you get, four ounces in it? I don't know. Do the math. It's probably $500 for a gallon of martinis.

ARNOLD: Mickelizzie walks off to his little mini-mart disgusted, leaving me and Beravesh standing out by the pumps.

BERAVESH: But he has a point, right? He's absolutely right. People are what — I mean, you know, people are willing to pay these outrageous prices for, you know, lattés and bottles of wine, but we get all worked up because of, you know, few-dollar gas. And mind you, we use more gas than we do coffee.

ARNOLD: But I don't know. If you're commuting, you know, 20 minutes to work and you go in and you buy a cup of coffee and a muffin and, you know, and you go out to lunch, you're spending a lot more money, day to day, on...

BERAVESH: Yeah.

ARNOLD: ...just little food items than you are...

BERAVESH: And that's exactly the point. We are, in terms of food bought away from home, that's a huge part of the budget these days; much, much bigger than gasoline.

ARNOLD: Bereavesh says how much people make and what they spend it on has changed a lot since gas prices last spiked and hit a record 25 years ago.

BERAVESH: Gasoline prices have risen about 130 percent since 1980. Now that sounds like a big number, except the take-home pay has gone up 340 percent, in that same period. So yeah, sure, gasoline prices are up, and up a lot. Don't, you know, we shouldn't belittle the fact. So it's all relative.

ARNOLD: Government figures show that in 1980, Americans, on average, spent five percent of their income filling up their gas tanks. Today, that figure is just 2/3 of that, 3 1/2 percent. Still, gas is around $3 a gallon.

ROBERT BARTLETT: It's a lot of money.

ARNOLD: Retiree Robert Bartlett has just pumped $37 of unleaded into his car.

BARTLETT: I'm a retired clergy. It is a lot of money.

ARNOLD: I mean, it's a lot of money, but, you know, you're driving a very nice Cadillac. You got the Cadillac baseball cap...

BARTLETT: That's right. The Cadillac is a used car.

ARNOLD: Bartlett at first says he might need to cancel a vacation or something because of the cost of gas. But when he thinks it over, he admits that probably won't happen. And so far, he says, he's been driving just as much as usual all over New England.

BARTLETT: I have to see my friends. I have to have — do something. I cannot lie dormant because someone decides to up on the gas. I'll figure something out, like everyone else.

ARNOLD: After the reverend drives off, economist Naramin Beravesh says demand for gas in the U.S. is not going down as the prices go up.

BERAVESH: And I think that's exactly what's happening, is people are irritated by it, they're unhappy, but it hasn't been changing their behavior that much, because I think, in the end, it's not hurting that badly, yet.

ARNOLD: If energy prices keep rising and were to somehow spark major inflation, that would hurt a lot of people, but so far that's not happening. Chris Arnold, NPR News, Boston.

SIMON: Why are gas prices so high? What can be done about it? NPR's Scott Horsley deconstructs the factors behind what we pay for gas on our website, lots of gas on our website. I should stop ad-libbing. At npr.org. And by the way, we hope that you're still listening to WEEKEND EDITION from NPR News.

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