NATION'S ECONOMY IN SHOCK - Gasoline Prices Soaring

(02/28/2008)

Gas prices for low-test gasoline went to about $3.33-a-gallon in Calhoun this week. The prices could approach $4, according to energy analysts. Gasoline prices, are suddenly rising quickly. Diesel is hitting new records daily, and oil settled at a record high exceeding $100 a barrel on Wednesday. The Spring increases could not come at a worse time for the economy. With growth slowing and the nation in a an unannounced recession, energy increases that were once absorbed by consumers are now more likely to act as a drag on household budgets. Energy costs, including the price of food and other staples, could worsen the nation's economic woes, piling a fresh energy shock on top of the turmoil in credit and housing. New figures showed that home prices around the country are falling at an accelerating pace, suggesting no end is in sight for the housing slump. On Tuesday, diesel prices rose to a record $3.60 a gallon, compared with $2.62 a gallon last year. Expect all trucked goods to rapidly increase. The price of oil has quadrupled in six years, and the close Tuesday was not far below the inflation-adjusted high set in April 1980, after the Iranian revolution. That record, $39.50 a barrel, equals $103.76 in today's money. As oil prices spiked last fall, low wintertime gasoline demand helped keep prices in check. "You're adding an oil shock on top of a crunch on credit and a housing collapse," said Nigel Gault, an economist at Global Insight. "Even the U.S. economy cannot withstand all of that at the same time."

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