gasoline prices

The nation has entered uncharted waters as gasoline prices rise, and some experts say that could spell trouble for consumer spending that's helping fuel the economic recovery.

The price of a gallon of gasoline has never approached $4 a gallon in April, and if the historical pattern holds, prices are likely to continue to climb through mid-July, when prices historically peak during the summer driving season.

Tom Kloza, chief oil analyst for the Oil Price Information Service, which surveys fuel prices nationwide for AAA, expects gasoline prices to peak in the coming months between $3.75 and $4 a gallon.

And should gasoline stay at $4 a gallon for an extended period of time, Kloza predicts a big pullback by consumers, because they will have about $12 billion less to spend each month than they did last year, when fuel prices were more moderate.

Those who will be hurt most "of course are the people who can least afford it," said Bill Sirakos, chief economist at Frost Bank in San Antonio.

"Think about the poor guy driving a dump truck for $12 an hour. It's just destroying his household budget."


In Houston, the price of a gallon of regular unleaded gas has climbed $1.01 a gallon, to $3.74, according to AAA. And in San Antonio, the price of a gallon of regular unleaded gas has jumped almost 99 cents a gallon in a year, to $3.67, AAA surveys show.


But on the flip side, higher oil prices — the main contributor to rising gas prices - help spur job growth in Texas.

When oil prices are high, job growth in Texas historically has exceeded that of the nation by a percentage point, said Keith Phillips, senior economist at the San Antonio branch of the Federal Reserve Bank of Dallas.

"When energy prices are high, the relative growth of Texas is greater than that of the nation," Phillips said.

Rising oil prices also will contribute to more exploration in Texas, including in the Eagle Ford shale south of San Antonio, a 400-mile-long swath where drilling has boomed in just two years' time.
Bigger royalties

And higher oil prices would mean greater royalty payments to landowners who've leased land in the Eagle Ford shale, Phillips said. San Antonio could benefit from their increased spending.

While gasoline prices today "are a hurt," said economist Travis Tullos of the Austin-based consulting firm TXP, he believes oil and gasoline prices won't stay high for a sustained period.
A temporary thing?

"Supply and demand don't seem out of whack," Tullos said. "Almost all of OPEC's top command is saying there's no problem meeting demand. So I think this situation is temporary."

A Federal Reserve survey released Wednesday indicated that the nation's economy improved in every part of the country this spring. Factories were busier, consumers spent more and companies boosted hiring in all 12 of the regions the Fed surveyed.
Retail sales up

And so far, higher gasoline prices haven't put a big dent in retail spending.


In March, retail sales rose 0.4 percent, the Commerce Department said Wednesday. In addition to spending more on gas, consumers shelled out more for furniture, electronics and at restaurants, Commerce said, and marked the ninth consecutive monthly gain.

Americans have made changes in their driving habits, at least in the last six weeks. That may have helped spending in other areas.

Purchases of gasoline fell for the sixth consecutive week for the seven days ending April 8, according to data from MasterCard SpendingPulse, which estimates spending across all payment forms, including cash and check.