NEW YORK — Within the next three months, a gallon of gas is expected to exceed $4.11, which previously marked the highest historical U.S. retail price set in July 2008. Prior to that, the highest that gas prices had ever been was $3.46 in March 1981.
But experts believe the Summer Gas Crisis of 2011 will look a lot different than the Summer Gas Crisis of 2008. For one thing, retailers were much more receptive to supplier price increases in 2008 than they are today, said Todd Hale, SVP consumer shopper insights for the Nielsen Group. “[But there have been] a lot of efforts made by retailers over the last couple [of] years during this recession to cut costs [and] lower prices to make them look more value-oriented to their shoppers. It’s a little difficult for them to go back on that.” That suggests higher prices will be passed along almost wholesale to the consumer, a factor that further could curtail spending, as wages remain relatively flat.
There’s also the impact of the recession to consider. Households generating more than $100,000 in annual income are faring much better today than they were in 2008. “The gas situation in 2008 carried further just because of what happened to our economy — people who had money stopped making trips,” Hale said. “Now we’ve got people who are feeling a lot more comfortable and confident about the economy.”
As many as 45% of households earning $100,000 or more said their confidence in the economy has improved over the past six months, compared with 24% among those earning less than $100,000, according to a recent Deloitte survey.
On the plus side, consumers may be better prepared to weather short-term price fluctuations at the pump today than they were in 2008. “Their short-term consumer debt has fallen,” said Gerald Hanweck, professor of finance at the George Mason University School of Management. “Consumers, in terms of their unsecured debt, are in much better shape than they were in 2008.”
However, secured debt, such as mortgages, still represents an impediment to consumer spending, so extended gas price increases would have a detrimental effect. Should higher gas price increases extend beyond the summer, that could have a major impact on consumer spending heading into the holidays, Hanweck said.