High oil prices could hurt consumer spending
Jeremy Hobson: We’ve been getting little tidbits of good news on consumer spending this week. The government reported Americans spent more last month — the 5th straight monthly increase. Wal-Mart said its sales were up in the U.S. last quarter.
But something else has been going up that can dampen consumer sentiment in a flash — that would be the price of oil. It has quietly climbed 20 percent in just over a month, to around $100 a barrel.
Our senior business correspondent Bob Moon reports.
Bob Moon: Strange thing is, U.S. demand for gasoline remains low. So low, that refineries can make more profit shipping our fuel to developing countries where demand is greater.
So says Tom Kloza with the Oil Price Information Service.
Tom Kloza: We’re cutting back, and the rest of the world is moving from sustenance to consumerism, and they’re using more. Particularly in South America.
In fact, Kloza says the U.S. has been a significant exporter of gasoline and diesel this year. That’s kept prices high here at home.
But analyst Stephen Schork says it doesn’t fully explain the biggest 30-day price spike ever in New York oil trading, within the past month.
Stephen Schork: You know what? There really isn’t an economic headline to explain such a sharp run in such a short amount of time. There is no fundamental reason.
He suspects speculators. But whatever’s behind it, the high price of gasoline remains a drag on the economy. Think of it this way: The extra money we’re expected to spend on gasoline this year, is nearly enough to put a new iPad into the hands of every man and woman in America.
I’m Bob Moon for Marketplace.
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