Here’s one reason high gas prices haven’t blunted the U.S. economic recovery — at least so far. The Wall Street Journal’s Ben Casselman reports that the average American household actually spent $25 less on energy costs this winter, compared to last.
But that’s just the winter. Spring’s about to bloom and, barring an apocalypse, summer will soon be upon us. Not only does driving tend to go up during the warmer months, but gas prices usually tick up about 50 cents per gallon in the summer. (That’s because refiners stop blending gasoline with cheap butane and swap in more expensive ingredients that don’t evaporate as easily in the heat.) What’s more, Americans will turn off their heating units and flip on their air conditioners, which means they’ll be relying less overall on cheap natural gas.
“If natural-gas prices stay low,” writes Casselman, “they’ll help keep electricity bills in check during air-conditioning season, but that likely won’t be enough to make up for higher gasoline bills, especially if oil prices stay on their current upward trajectory.” And if those higher gasoline bills cut into consumer spending elsewhere, that could act as a drag on the recovery. (How much drag is still a matter of some debate, as Michael Levi explains.) The economy has been able to gallop past soaring crude oil prices this winter, but there’s no guarantee that will last.