MarketWatch.com - Pre-Market Indications

Wednesday, March 12, 2008

24/7 Wall St.: $5 Gas By Labor Day

24/7 Wall St.: $5 Gas By Labor Day


$5 Gas By Labor Day

If gasoline prices move from their current average price of $3.20 to $5, the cost of fuel for a family that spends $50 a week for gas would move up over $1,000 a year. That would wipe out any tax rebate payments from the Federal government and drive the economy deeper into its currently slowdown. It would also further fracture already delicate P&Ls and balance sheet at large auto makers and airlines. Retailers would get less traffic. Very few industries would be spared some effect.

Rising oil prices cannot be fixed by the Fed, That means that the most crushing blow to the economy, higher fuel prices, is largely beyond the control of the government. Rising crude is driven by futures speculation, the falling dollar, and an imbalance of supply and demand.

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