There's an App for That! With Rising Gas Prices get GasBuddy

As a result of ongoing geopolitical tensions with Iran, as well as a refinery fire in the State of Washington temporarily reducing supply, it is not surprising that the price of crude oil continues to trend higher.  Since the end of September the price of a barrel of oil has increased by over $30.  And when oil costs more, so will the price of gasoline at the pump.  Shown below is the inflation adjusted price of gas since 1980. 

As you can see, gasoline prices with a couple of exceptions have never been higher than current levels.  Average gas prices are currently $3.59 per gallon and they are expected to top $4.00 per gallon soon.  

So how do rising gas prices affect us?  Not surprisingly, rising gas prices have a cascading affect of negative consequences. 

1. A 10 cent rise at the pump removes a whopping $11 billion annually from consumers wallets leaving less available for other goods and services.  And as you know, current gas prices have increased significantly more than 10 cents a gallon over the past few weeks. 
2. There is a direct inverse correlation between rising gas prices and consumer confidence.  Historically when gas prices have risen significantly in a short time period consumers become significantly more pessimistic.  When they're asked, "Is the economy headed in the right direction?" a majority of them will say "no."
3. When the public becomes pessimistic they get into a "hunker-down" mentality and spend even less than is actually warranted. 
4. Those businesses that are inordinately susceptible to rising gas prices will be affected the most: trucking companies, public transportation, the auto industry, the airlines will all be adversely impacted. 
5. Of course it's a political liability for both state and national politicians of both parties when prices rise at the pump.  But during a presidential year it makes for lots of political hay.  It's no surprise that Republican presidential candidates are blaming the Obama administration about rising fuel costs.  The reality is that presidents can only marginally affect oil prices with their energy policy and usually that takes years before the impact of their decisions are felt.

So the big question is, "How will rising gas prices affect the economy? Although it's hard to believe, the U.S. economy has had 11 consecutive quarters of positive growth.  But rising fuel prices may have a dampening affect on our fragile economy.   Personally, I believe our economy is resilient enough to weather the impact of rising fuel prices.  But a lot of it will have to do with our perception of reality.  If we can remain cautiously optimistic we will get through this.  

On a personal note I was introduced to a free application for my iPhone called GasBuddy.  It monitors all the local gas stations in your immediate area and shows you which gas station has the lowest gas price.  I saved 27 cents a gallon by going to the Fred Meyer gas station on Imbrie Drive instead of the gas station I normally get my gas from.  That's a savings of over $4.00 per fill up.  Not bad for a free app!

Sources: Gasoline (Inflation Adjusted), by Chart Of the Day, February 24, 2012; How Gas Prices Affect The Economy, by Financial Edge, May 24, 2011, Global Tensions put Gasoline Prices in Overdrive, Post-Gazette.com, February 24, 2012; How Gas Prices are Affecting Consumers; ABC News Blogs, by Zunaria Azki, February 24, 2012.