NEW YORK --- The average price of regular gasoline in the U.S. reached a record $4.005 a gallon, up 28 percent from $3.119 a year earlier, AAA said Sunday, June 8.
"The fact that confidence has gone down as inflation expectations are going up indicates gasoline has been an important driver because it's one of the reasons expectations are rising,'' Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Mass., told Bloomberg News.
In May, consumer confidence dropped to a 28-year low, as inflation concerns rose to their highest in more than two decades, according to last month's Reuters/University of Michigan sentiment survey.
"There has never been a price like this,'' industry analyst Trilby Lundberg told Bloomberg on Sunday. "Gasoline demand growth has been flat, now it is turning negative and price is the reason.''
Lundberg's survey of 7,000 gas stations nationwide revealed that gasoline shot up 20 cents on June 6 from three weeks earlier to $3.99 a gallon, Bloomberg News reported.
Gault estimated that every sustained 20-cent gain in the price of gasoline trims 0.3 percentage point off consumer spending growth. Economists surveyed by Bloomberg News in the first week of May forecast consumer spending this year will grow at a 1.5 percent rate, compared with 2.9 percent last year.
Gasoline prices climbed while inventories dropped more than 11 percent since March 7 to 209.1 million barrels, the Energy Department reported on June 4.
Crude oil for July delivery rose $10.75, or 8.4 percent, to settle at $138.54 a barrel June 6 on the New York Mercantile Exchange, Bloomberg reported. The cost of crude oil determines about 73 percent of the price of gasoline at the pump, according to the Energy Department.
Oil futures traded at $137.80 a barrel in New York on Monday, June 9.
Originally posted on Automotive Fleet