High Oil Prices Hit Wallets As Consumers Are Forced To Spend More On Fuel

The price of oil eroded Americans' spending power over the last several months, according to new post from the Commerce Department.

As oil prices have shot up and gas prices at the pump have followed, consumers and businesses have been forced to pay more for fuel. The average household monthly motor fuel expenditure increased by more than 22 percent between October and March, the post by Commerce Department Chief Economist Mark Doms showed. Even though oil prices abruptly dropped earlier this month, crude has since pared some of its losses, and pump prices remain high, suggesting that fuel will continue to sap household finances.

From the Commerce Department

At this rate, the net amount of money the nation pays to other countries for oil is on track to reach about $3,000 per household in 2011, an increase of 25 percent from last year, the note said. This fuel trade deficit per household grew by two-thirds between October and March, and in the first quarter of the year, petroleum-related products made up nearly 60 percent of the total U.S. trade deficit, the note showed.

From the Commerce Department

Faced with higher gas prices, some Americans have reported cutting back on driving. But people need to get to work and shop for food -- they can only cut back so much. Every penny increase in the cost of gasoline tears more than a billion dollars from the economy yearly, economists say.

As conflict in the Middle East has stoked commodity investors' fears of a supply disruption in recent months, oil prices have skyrocketed. Even after the price of crude dropped by 10 percent in one day earlier this month, prices are still at levels that recall the summer of 2008, when months of record-high fuel prices helped drag the economy into recession. The price of Brent crude, an international benchmark, is now more than 50 percent higher than it was this time last year.

Nationwide, the average cost of a gallon of regular gasoline is now $3.91, according to the American Automobile Association.

Go to the Commerce Department website for more charts.

Clarification: An earlier version of this article stated that the Department of Commerce warned of a continued erosion of Americans' spending power. The Commerce Department does not make economic predictions.

Comments

[fortressfountain]

08:58 PM on 05/21/2011

I do not think people will quit driving in the USA-only cut back on shopping at the mall and such. That money the politicans thought they would get for health care will not come as people will drive their cars.
If I feel like going out a night for a soda or to visit a friend I do not intend to car pool.

[MSROADKILL612]

05:06 PM on 05/21/2011

is it just me, or is a big problem that we r so out of the loop, we want door to door in a car.

Teens are outraged if u drop them, conveniently, a block away

Was recently walking past gridlocked traffic w/ my daughter & she is harassing me 4 parking so far out.

Bike car is a good combo - carpool 2 easy riding distance of work - dont take u fellow poolers out of their way.for a quick trip 2 walmart - grab the 1st spot u see & bike it to the door w/ a back pack.

[MSROADKILL612]

10:46 AM on 05/21/2011

Cmon toyota - a factory cng prius w/ phil in the 6 car garage, would be perfect for the LA hills.

Heaps of placement ads as they front the red carpet at gala events.

[MSROADKILL612]

10:38 AM on 05/21/2011

Just a thought, but imagine the valuable waste that has polluted the US over the years - illegally dumped chicken fat etc - woulda made great bio diesel

[MSROADKILL612]

09:14 AM on 05/21/2011

Am gonna get flamed for this, but for america to have a hope of exporting cars, it must have similar gas prices to most of the globe.

U cant sell cars intended for a $3 pg market in a $10pg market. Most dont give a damn. The only influence on behavior ... is the cost at the pump.

Tiny home markets like japan & korea have become global players, while detroit withered, even on its home turf.

Its a rarity for them to even make a RHD car in US.

Any influentia auto exec who made big money from it in last 50 years ought be bankrupted & run over. The marketing guys have a lot to answer for, but the sad thing is the big bosses believed them, not the engineers.

Cheap US gas, long perceived a blessing, is in fact a curse. Led to; wrong; cities, shops, schools, foreign policy, (attitudes - can read on a train - u get shock jocks in a car)

[MSROADKILL612]

08:14 AM on 05/21/2011

If they refine oil, why not coal? The best has double the energy by weight of oil. Surely graphite could at least supplement diesel?

[cliff53]

12:37 PM on 05/20/2011

The one and only one we can blame for the high price of gas is us, the American consumer. We try and place the blame of OPEC, speculators, oil companies, congress, the president, or any one else we can find to place the blame. We continue paying the high prices because we do nothing about it. There is power in numbers. If the American consumer, and any business that uses fuel from airlines right down to the gas lawn mower and leaf blower quit buying fuel for 12 hours, I can assure you the greedy oil companies would get the message, that the American consumer has just set the price of gas. Until we grow bigger balls and show these greedy thugs that the American consumer has the real power, we will continue getting the old Vaseline treatment.

[AcademicFreedom]

10:50 AM on 05/20/2011

The bamma regemee is working overtimes to figure out how to blame this on Bush

[JLFL]

11:59 AM on 05/20/2011

These issues aren't necessarily Bush's fault directly, but the legislation that enables these problems to creep up are wholly that of Republicans in that the Commodity Futures Modernization Act enables excessive, unregulated speculation in the oil markets.

[Reiner-von-Sinn]

09:12 AM on 05/21/2011

Regarding your post, is being that dumb and disconnected from any objective reality like being really, really high?

[AcademicFreedom]

09:39 AM on 05/21/2011

You are a bully and making me feel very insecure and not good. There should be some type of law against being a bully. I think you should be nice and not be a bully and say that I'm dumb. What you say hurts my feelings and damages my self worth.

[nothingchanges]

10:16 AM on 05/20/2011

Unlike the government, most of us are forced to live within our means.

With gasoline prices nearly doubling, most of us have had no choice but to cut back on other budgetary items. Thus further eroding an already fragile economy.

Now the biggest topic of concern in Washington is controlling the debt by austerity measures. (Heaven forbid we should ask the wealthy to pay the same tax rate as wage earners, to get the country moving forward again)

The country needs an FDR, looks to me like the Hoover economic model will prevail.

"Double dip" in this case, is not a very desirable option, but one (given our bought and paid for congress) with increasing likelihood of taking place.

[glenbishop]

11:32 AM on 05/20/2011

Not FDR - Teddy Roosevelt. But up the control of congress by business.

[teabagmetos]

11:09 AM on 05/21/2011

NO we need to up the Control of Congress by We the People, Leave Business out of it.

[Patriot86]

09:26 AM on 05/20/2011

My gas is down about 30 cents.

[glenbishop]

09:03 AM on 05/20/2011

In Europe I drive a great 5 year old Ford Mondeo. It gets 40mpg mixed city / highway. A similar sized new Ford in the US gets 25mpg. Prefer mine? Can't have it. Ford won't sell it in the US.

Mine gets better mileage because its a diesel. 35% to 40% more efficient than a gas engine. A standard transmission adds another 10% to 15% to fuel efficiency.

Forget what you've heard about diesel being dirty or noisy. The new turbo-diesels are clean and quite.

About 75% of new cars sold in Europe are powered by diesel.

The Big 3 all have subsidiaries in Europe that manufacture very nice diesel powered cars. They own the technology already. There is no R&D necessary. But they don't offer them here in the USA. Why not? A question you might want to ask your dealer, as well as your Congressperson.

Imagine your next car, truck or SUV getting 40% to 50% better mileage, based on a simple well known technology. Worth looking into.

[ruburnt]

06:44 AM on 05/21/2011

My favorite car was my 1984 Jetta diesel. Volkswagen still sells diesels in America and they have a lot of different models to choose from.

[MSROADKILL612]

07:26 AM on 05/21/2011

Do some googling first - vw have a v bad rep for durability, qc, and dear parts here in OZ anyway. Some say $12k for a new dsg gearbox. dont know, just sayin.

[bola47]

08:59 AM on 05/20/2011

probably one of the stupidest headlines ever written, duh.

[MrBadExample]

08:25 AM on 05/20/2011

kenport 3 Fans Become a fan Unfan 42 minutes ago (7:28 AM) There is still lots of oil off the coasts. With the approriate safety measures taken .. we can still drill. Also see this web site http://bak­kenshale.n­et/ Favorite (0) Flag as Abusive =========================== The newsletter link is not for a geology company--it's for a stock market newsletter. Virtually all of the information is either not true or not relevant. http://www­.snopes.co­m/politics­/gasoline/­bakken.asp We are in serious trouble with regard to the mis-match between energy use and energy supply. People need to apply some serious-minded thought to getting through this time. Accepting what Rush or Sean or even Rachel says in an unquestioning way will get people into serious trouble.

[MayFlower27]

08:23 AM on 05/20/2011

It looks like Democrat nor Republican will be a good choice in the next election, try Independent?

[Patriot86]

09:26 AM on 05/20/2011

So we can elect a Republican..no thanks I live in Ohio and see what they are capable of everday...you one of those fake GOP indendents?

[OldTulsan]

12:41 PM on 05/21/2011

Third party, or independent candidates, have two problems. The first is the huge amount of money needed; this graph gives some idea:

http://www.opensecrets.org/pres08/
Banking on Becoming President | OpenSecrets

The second problem is that ballot access laws have been rigged by the two-party duopoly to make it almost impossible for independen­t or third-part­y candidates to get on the ballots:

http://www.thelibertyvoice.com/ralph-nader-ron-paul-agree-ballot-access-laws-are-rigged-against-independent-third-party-candidates
Ralph Nader & Ron Paul Agree: Ballot Access Laws are Rigged Against Independen­t & Third Party Candidates | The Liberty Voice

http://rangevoting.org/Strangle.html
RangeVoting.org - Stranglehold of 2-party domination

http://www.freeandequal.org/videos/free-equal-ballot-access-movie/
Free & Equal Ballot Access Movie

There is some progress:

http://www.freeandequal.org/2011/04/ballot-access-reform-bills-in-16-states-nation-wide/
Ballot access reform bills in 16 states nation-wide | Free And Equal

There was more turnover in the Soviet Politburo than in the U.S. Congress

[celticfireusa]

08:00 AM on 05/20/2011

Gm Volt cost $ 40,000 plus $ 2.000 for a special hookup for the home and only goes 200 miles or less needs to be charge for 8 hours ...so is it worth it ?

[Patriot86]

09:28 AM on 05/20/2011

That is an out and out l_ie..the volt is the only car that has a backup gas engine that can run if the electical is depleted and it can also charge the battery...the Volt is a great car and has a waitig list of at least six months...maybe a year...you drive short distances, you will use no gas...you drive longer and you have a backup gas engine...competely different then all the others.

[MSROADKILL612]

07:30 AM on 05/21/2011

Off the wall, but - an electric car where u can rent a trailer w/ generator from uhaul for rare long trips.

[Patriot86]

09:29 AM on 05/20/2011

Lots of buyers think so....big waiting list.

[ruburnt]

06:48 AM on 05/21/2011

Is this the car GM had problems with the steering wheel falling off?