Gas Up, GDP Down

Every penny rise in gas costs the economy $1.8 billion/yr. With gas at $3.65, 40 cents more than a year ago, that’s a $72 billion tax. If prices rise another 40 cents, bringing the price within six cents of the all-time high of $4.11 in 7/08, it would trim 1% off GDP. With summer driving season nearing, along with increasing geopolitical risk, costly EPA summer reformulation and refinery maintenance, I bet prices keep climbing.