Raleigh, N.C. — The cheapest gas prices in Raleigh are more than $3 a gallon.
“It’s getting ridiculous for prices to be as high as they are,” driver Lisa Lawson said this week. “It’s hard to pay rent and then spend $3 (a gallon) on gas.”
Oil prices had been rising for months, but they jumped this week to $100 a barrel as violence gripped Libya. Analysts say any production declines in Libya could likely be absorbed by other producers like Saudi Arabia. Libyan oil accounts for less than 1 percent of U.S. crude imports.
North Carolina State University economist Michael Roberts said consumers shouldn’t expect gas prices to drop any time soon.
“We’ll store more of the commodities, more of the oil today, in case prices go up in the future, so that causes prices to go up right now,” Roberts said.
About half of the price of gasoline is the cost of refining and retailing, as well as taxes. The other half is the cost of crude oil.
“If you see oil prices go up 15, 20 percent, you'll see gas prices go up by about half that,” Roberts said.
Roberts said higher gas prices probably will not push up other prices.
“Transportation is going to be a very small share of the retail price of almost anything that we buy,” Roberts said. “The vast majority of almost everything we buy in the United States is the cost of labor to produce it.”
These high gas prices mean that it will take a little more labor to fill up gas tanks.
“I’m hoping that these prices come down and really soon, so we can be able to maintain,” Lawson said.
The national average for a gallon of unleaded was $3.19 on Wednesday — 53 cents more than a year ago. Analysts expect the average to range between $3.25 and $3.75 this spring.
Drivers aren’t the only ones suffering from the high oil prices. Consumers and businesses would also feel pinched by a sustained period of $100-a-barrel oil. Stock prices, which have lost more than 2 percent so far this week, could sink further. That would reduce household wealth and consumer confidence. As fuel costs price rise, so would prices for travel services and products containing plastics.
This month, several airlines tacked on fuel surcharges — extra fees that help cover fuel bills.
Rising oil prices have pushed jet fuel close to $3 a gallon. Fuel accounts for roughly one-third of the budget for U.S. airlines, up from less than one-fifth a decade ago. Fitch Ratings analyst William Warlick said if jet fuel reaches about $3.20 a gallon, "the whole industry will be challenged to stay profitable."
Airlines may soon decide to eliminate some flights and ground older jets to cut fuel consumption, Warlick said. Delta Air Lines has already scaled back plans to add flights this year.
Analysts estimate that, over a year, $100 oil would reduce U.S. economic growth by 0.2 or 0.3 of a percentage point. So, rather than grow an estimated 3.7 percent this year, the economy would expand 3.4 percent or 3.5 percent. That would likely mean less hiring and higher unemployment.
The global economy wouldn't be affected as much. In part, that's because emerging economies consume less oil per person than industrialized countries do. In addition, many developing countries regulate or subsidize the cost of gas. Global growth would slip about 0.1 percentage point, economists estimate.