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Wallets take hit from gas price rise

Normally gas prices dip after Labor Day. This year, gas prices actually have gone up, adding insult to injury for recession-weary consumers.

Gas prices have risen nearly 6 cents in the past month. Compared to last year, gas prices are running about 15 to 20 cents higher.

That’s not a positive sign for an economic recovery, which depends in part on people spending their money at stores, restaurants and other businesses.

“It’s going to reduce the consumer’s disposable income, which is going to impact retail sales at the time when they’re needed most,” said Scott Cain, vice president of San Joaquin-based West Hills Fuel Inc. and an economics instructor at the University of Phoenix in Fresno.

In San Luis Obispo County, a gallon of regular gas on Tuesday cost an average of $3.20 — about 20 cents more than a year ago, when regular was $3.01 a gallon.

Most years, gas prices drop after Labor Day as the vacation season ends and slowing demand brings prices down. California also switches to a less expensive blend of gasoline designed for cooler weather.

This year, the rising cost of crude oil overcame both of those factors to push up prices at the pump.

Crude oil prices have risen 10.6 percent this year to a two-year high, closing last Thursday at $87.81 a barrel on the New York Mercantile Exchange. Every $1 increase in a barrel of crude translates to a 2.4-cent-per-gallon increase at the pump, according to the federal government’s Energy Information Administration.

Consumption of crude oil and estimates of future consumption are rising and pushing up the price of crude, said Tancred Lidderdale, senior economist with the Energy Information Administration.

Countries with maturing economies such as China and Middle East nations are driving that increase, he said. Those countries are kicking up production at factories and buying more cars, both of which need fuel.

Tribune Staff Writer Stacy Daniel and The Associated Press contributed to this report.

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