Energy reporter Jad Mouawad's "Gas Prices Soar, Posing A Threat To Family Budget" garnered the off-lead position on Wednesday's front page, a placement probably fueled by Mouawad's dire spin on whatthe recent rise in prices at the pump will mean for the economy.
Gasoline prices, which for months lagged behind the big run-up in the price of oil, are suddenly rising quickly, with some experts saying they could approach $4 a gallon by spring. Diesel is hitting new records daily, and crude oil rose above $102 in trading Wednesday after settling at a record high of $100.88 a barrel on Tuesday.
The increases could not come at a worse time for the economy. With growth slowing, energy increases that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could worsen the nation's economic woes, piling a fresh energy shock on top of the turmoil in credit and housing.
"The effect of high oil prices today could be the difference between having a recession and not having a recession," said Kenneth S. Rogoff, a Harvard economist.
The depth of the nation's economic problems became clearer Tuesday with the release of figures showing that prices at the producer level rose 1 percent in January from December, driven in large measure by energy costs. Compared with a year ago, prices were up 7.4 percent, the worst producer price inflation in the United States since 1981.
Other new figures showed that home prices around the country are falling at an accelerating pace, suggesting no end is in sight for the housing slump.
As of Tuesday, regular gasoline was selling at a nationwide average of $3.14 a gallon, according to AAA, the automobile club, up from $2.35 a year ago. The price has jumped 19 cents a gallon in two weeks.
Mouawad at least provided a paragraph of historical perspective:
Still, things are not quite as bad as during the 1970s and 1980s oil shocks. In the early 1980s, at the height of the last energy crisis, energy accounted for about 8 percent of household spending. As prices fell and the economy became less energy-intensive, energy costs fell under 4 percent of household spending in the early 1990s.