GasPricer

Gas Prices Weigh on Consumers

Oil prices hit a record high this week. But, the gas station is not the only place people are feeling the pinch in their pocketbook. The economy is suffering from the continuing housing slump and credit crunch, and the Federal Reserve is trying to cushion the economy. The Federal Reserve is expected to cut interest rates, and an announcement on that could come as early as this week. The weak U.S. dollar is contributing to an all-too robust surge in oil prices. It hurts at the pump. At the end of Monday, the price of a barrel was $93.53. Government figures released just this week show the national average price for a gallon of gas is $2.87, up a nickel from last week and 65 cents higher than this time last year. So, what's driving it all? It's a combination of ongoing tension in the Middle East and instability in oil-producing countries. This week Mexico's state-run oil company announced a nearly 20 percent drop in daily production due to bad storms. That gives traders the jitters over an already tight supply. It also gives consumers a wake up call. Many consumers are purchasing smaller more fuel efficiant cars. These days anyone who watches TV or reads the paper is hearing about how bad the economy is getting. This makes most folks think twice about your spending. That could lead to a drop in domestic economic growth, another unwelcome hit to the U.S. market. The Federal Reserve is expected to consider adjusting inflation rates this week. That would make the dollar weaker on global markets, but provide support for increasing oil prices.