Gasoline prices across the nation are on the rise. On average, a gallon of regular gas costs about $3.59 in the U.S. This represents an increase of more than 7 percent in the past month and an increase of over 11 percent from this time last year.
Higher gas prices have an immediate effect on many consumers. Whether through decreased miles driven or less to spend on other retail purchases, higher gasoline prices result in more disposable income being spent on transportation and less spent on other items. At a time when the U.S. economy is struggling to recover, a material decrease in consumer spending on discretionary items will push the anticipated economic rebound further into the future.
Prices for regular gas in Utah are on the lower end of the national range. With reported prices around $3.10 per gallon, average gas prices in Salt Lake, Ogden and Provo all rank among the lowest 10 cities in the U.S. Only a few cities in Colorado report average gas prices a few cents per gallon lower.
While the average cost to fill up in Utah is on the lower side the U.S. average, Californians are paying the highest average price for a tank of gas. A gallon of regular gas costs more than $4.00 on average across that state.
Looking back over the last five years, average U.S. gas prices hit a high of about $4.12 per gallon in the summer of 2008. For the same gallon of regular gas in Salt Lake City, the high price of $4.16 occurred at about the same time.
One of the many factors influencing retail gas prices is the cost per barrel of crude oil. Back in the summer of 2008, crude hit an average price per barrel of more than $145. Currently, crude oil is trading at approximately $107 per barrel for West Texas Intermediate crude.
If the current trend toward higher gasoline prices persists into the spring and summer, the impact on discretionary retail spending will become more and more negative. Higher gas prices will also be reflected in the prices of many retail goods, as manufacturers incur higher input and transportation costs. These higher manufacturing and transportation costs will be passed on to the end consumers in the form of higher prices.
Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.