Rising gas prices could put brakes on economy

Miami salesman Miguel Rodriguez couldn’t find gas for much less than about $3.99 a gallon on Presidents Day.

“It’s not easy,” he admits. “Four dollars a gallon is very difficult to work with.”

As it turns out, South Florida consumers increasingly are feeling the effects of more than a month’s worth of rising gas prices. As of the end of February, surveys showed unleaded regular averaged $3.89 in Miami-Dade — up 41 cents the past month alone. And Broward? It was up 42 cents at $3.87 a gallon. Statewide, gas averaged $3.79 a gallon. That was six cents more than the national average of $3.73.

So why are prices suddenly so bad?

AAA calls it a “perfect storm” of weather and Wall Street. Winter blizzards up north are boosting demand for heating oil at the same time that Wall Street is hitting new highs for the year. That’s been fueling speculators to buy more oil futures and boost wholesale oil prices.

In addition, with paychecks and new hiring stalled around South Florida and across the country, consumers are feeling the pinch of trying to figure out where to cut spending in order to afford those higher gas prices. “It changes our budgets and limits outings maybe with the family,” Doral resident Santiago Quinn warned.

“It changes the amount of times we travel. We try to keep it as minimal as possible.”

West Dade’s Yaleska Martinez said her budget cuts may have to include all extra spending.

“Where do I have to cut back?,” she asked. “The things I like — going shopping and all of that — I am going to have to cut back on.”

With consumer spending playing such a major role in the economy, higher gas prices could trigger more bad news for local businesses while struggling to keep current workers and wondering if it’s time to add any new ones.

So when might we see prices come back down again? As long as we see a bull market on Wall Street, investors will continue buying oil futures. And that could keep wholesale prices high.

Hopefully the worst winter weather may be behind us. Even so, spring break is just around the corner and gas prices are still usually higher than normal when drivers start hitting the roads for the holidays.

Watch Al Sunshine’s “4 Money Watch” reports Monday-Friday. You may find Al’s blog at www.cbsmiami.com.

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