Energy Insights: Gas Prices on the Rise, Again
The economy of the United States continues to trouble the minds of the American public. Almost half (48%) of registered voters see the economy, unemployment and jobs as the single most important issue facing the United States, above government spending and the deficit (11%) and healthcare reform (11%). The public is anxious for signs of improvement as most (75%) believe the current economic condition is very bad (29%) or fairly bad (46%). Additionally, over half (56%) believe the U.S. is still in a recession.
This pessimistic outlook sparks a very high level of interest among the U.S. public regarding factors that could impact economic recovery. On a weekly basis seven-in-ten (68%) U.S. adults follow reports on the condition of the U.S. economy either very (35%) or fairly (33%) closely. Even when news stories are not directly related to the economy, the public looks for the media to establish a link.
For example, in recent weeks media coverage has focused mainly on unrest in North Africa and the Middle East. In the last week of February, one-third (31%) of news stories were centered on the violence in Libya. While the public is following the situation unfolding in Libya closely (38%), most are following the potential impact it may have on the U.S. economy (49%) and more specifically gasoline prices (50%), as seven-in-ten (71%) U.S. adults report gas prices are extremely (36%) or very (35%) important to them personally.
Crude oil prices (largest determinant in gasoline prices) have risen more than 10% over the past month and while they may begin retreating with the announcement that OPEC is considering boosting oil production, Americans are still feeling the sting in their pocketbooks. Six-in-ten (59%) U.S. adults report that higher prices for gasoline affect them a great deal.
Over half (52%) of adults report that recent price increases in gasoline have caused financial hardship for their household and three-in-ten (29%) report serious financial hardship due to rising prices. Currently, the public does not believe our government is handling the escalation of gas prices well. In fact, six-in-ten (58%) disapprove of the way President Barack Obama is handling the situation.
Regardless, even if OPEC boosts production, crude oil price instability may spread as uprisings continue in other oil producing nations such as Saudi Arabia. Conflict in North Africa and the Middle East could spike gas prices above $4 this summer which could have further reaching implications than just the cost to fill the tank. If gas prices continue to rise, there is potential for a number of industries to be affected. Renewable energy such as wind and solar may see a more aggressive push for development as a viable alternative to fossil fuels. Alternatively, there may also be a demand for increased exploration for oil and natural gas off the coasts of the U.S. to increase our domestic energy supply. The tourism industry may also suffer as individuals are no longer able to afford the cost to reach favorite destinations or are forced to cancel trips as a way to protect their finances.
Additionally, the automobile industry may be impacted as consumers demand more fuel efficient or hybrid vehicles or delay purchase decisions until prices stabilize. Consumer behavior changes may also have detrimental impacts on the retail and restaurant industries as shopping trips become fewer and disposable income diminishes.
There is contention among analysts on the lasting impact of rising crude oil prices. Some analysts do not foresee a detrimental impact on economic recovery, while others believe the prospect of economic recovery continuing are shaky at best. Regardless, North Africa and the Middle East control one-third of the world’s oil supply and as instability continues the American public will continue to pay close attention to its impact at the pump.
For research references, please contact Jenn Haskins.