Rising Gas Prices May Cause Chain Reaction; Cost Flux on Store Shelves Will Result
In these trying times, consumers throughout the U.S. have become experts at searching for mark-downs and hunting for deals on food, clothing and anything that can be store-bought. Heck, there's even a show on TLC that highlights the lives of extreme “couponers”!
Unfortunately for American consumers, this coming summer may pose a problem for their perfected bargain shopping ways, as the price of gas continues to rise and will ultimately impact the prices of goods on shelves across the country.
Over the past few years, drivers have been forced to sit back and watch gas prices climb, jump and spike at the top of the record chart on an inconsistent basis. Sentences like, “Remember when gas was a nickel a gallon?” are grumbled by older generations, utterly stunned at the unforeseen peaks the price per gallon has been reaching.
Well, here is just one more thing to complain about. According to z6mag.com, history is gearing up to repeat itself, and unemployment may rise once again all thanks to the petroleum pump that gets us from point A to point B.
“It has been rumored that gas prices might well exceed the $5 mark within the next couple of months,” z6mag reported. “If that is the case, the trucking industry may have no choice but to pass those prices on to consumers. That means inflation will hit the store shelves and consumers will have no choice but to change spending habits.”
And as the weather continues to pretend we are already in the summer months, it appears that several gas company's stocks thought that yesterday was the first day of summer as well, rather than spring. Exxon Mobil Corporation (NYSE: XOM) is currently trading down -0.35%, while Sunoco Inc. (NYSE: SUN) is trading down -1.46% and Marathon Oil Corporation (NYSE: MRO) takes the biggest hit with -3.58%. In comparison, S&P500 is at +0.06%.
From these numbers, it can be inferred that America is in for a financially challenging few months when it comes to pumping money into the tank.
Gasoline has been a hot topic for analysts and consumers alike, as BMO Capital Markets conducted a roundtable discussion with field experts weighing in on the benefits and negatives of paying $5 per gallon this summer. The outlook is as bleak as one would imagine it to be.
In the research report published earlier today, BMO Capital Markets said, “Five-dollar gasoline would slow the US expansion materially and raise the unemployment rate. In fact, a 35% increase in prices would drain $170 billion from annual purchasing power, possibly reducing consumer spending by 1½% and real GDP growth by 100 basis points in both the US and Canada. By itself, it probably would not lead to a recession, but the adverse effects of higher joblessness on already-weak consumer confidence and housing markets could be troublesome, especially if Europe's credit crisis worsened.”
It appears that now would be the time for American drivers to consider other forms of transportation, while stocking up on their favorite inexpensive goods, as this summer is bound to present economical difficulties.
Marathon Oil is currently trading at $33.23. Sunoco Inc. is currently trading at $39.59. Exxon Mobil is currently trading at $86.29.
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