LIANE HANSEN, host:
Sticker shock hit the gas pumps again this past week as it has so many times in recent months. According to the Energy Department, the average price of gasoline nationwide was $2.55 a gallon. After the biggest one-week jump on record, some drivers paid more than $3 a gallon. NPR's Scott Horsley has been following the flow of dollars for gas, and he joins us.
Scott, $2 1/2 for gas at the pump, even higher. Any relief in sight?
SCOTT HORSLEY reporting:
Well, Liane, you know, gas prices have been creeping up for most of the summer. We've been over $2 on average since mid-March across the country. But the big jump that we saw at the beginning of this past week, 18 cents across the country, really got people's attention. It came after a steep run-up in crude oil prices the week before. I don't think we're going to see that kind of eye-popping jump again, at least not right away. Crude oil prices actually dropped a bit in the early part of this last week before bouncing back on Friday. We ended the week above $65 a barrel.
We might see gasoline prices drop a little bit after Labor Day when the so-called summer driving season ends, but there's really no guarantee. Last year, the gas price kept climbing right through mid-October because of hurricanes that were disrupting oil production in the Gulf of Mexico. The Energy Department says even if crude oil prices fall back into the mid $50-a-barrel range, which is about $10 below where we are right now, look for gas prices to stay above $2.10 a gallon through the end of next year.
HANSEN: Politicians are beginning to pay attention to the public anger over the rising gas prices. The Senate Energy Committee announced plans to hold a hearing next month on what's fueling these high prices. Is there anything they can do other than hold hearings or news conferences?
HORSLEY: Not much. I mean, you know, Congress just passed the big energy bill and it was signed into law this month, and you saw how much good that did. There's really not any mystery about what's behind these high gas prices. That's what the committee says they want to investigate. Pretty much everyone will tell you it's high crude oil prices, it's refinery outages and this at a time when demand for gasoline is typically at its peak for the year. But I'm sure the politicians feel like they're hearing from their constituents they need to do something, at least give the appearance of doing something. The committee's chairman, Pete Domenici, warned that the high prices might crimp consumer spending and blunt their confidence in other parts of the economy.
HANSEN: Might they?
HORSLEY: Well, it's interesting. We had a report this past week from Wal-Mart--of course, the nation's largest retailer--of lower-than-expected sales and the chain's smallest profit increase in four years. Wal-Mart's CEO says he's worried about high gasoline and oil prices. On the other hand, some other retailers reported stronger sales this past week. So I think as you move higher up the retail food chain, you find consumers who are less sensitive to the price of gasoline.
One thing, though, that has been, I think, puzzling is why we haven't seen a bigger impact on the economy from gasoline prices that are, after all, 36 percent higher than they were a year ago.
HANSEN: Can you answer that puzzling question, why haven't we?
HORSLEY: I can try. I think one part of it is that even if gas prices double, they still make up a relatively small piece of the average household's budget. Businesses across Americas have become less energy intensive. Consumers, on average, have as well, not the way we drive really but, you know, in the first half of this year, for every a dollar a consumer spent, 3 cents went for gasoline. Back in the late '70s, early '80s, that was 5 cents. So for all the grousing over high gas prices, it's just not a very big piece of the average household budget. We spend more on restaurant meals. We spend more on shoes and clothing. So despite the big psychological impact when you're standing at the gas pump and you see those numbers spinning around, if you take a step back and really think about how much gas is in your wallet, that's maybe why the impact has been more muted than we otherwise would have expected.
HANSEN: So what do you think it's going to take to lower prices?
HORSLEY: It's going to take more supply or less demand. And, so far, even though the price is very high, we're still burning more gasoline than we were a year ago. We're burning considerably more diesel than we were a year ago, and really that's a sign that we're having a fairly strong economy, people are still driving, we're still buying a lot of stuff, and that stuff has to be trucked around the country.
HANSEN: NPR's Scott Horsley. Scott, thanks a lot.
HORSLEY: My pleasure, Liane.
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