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High Gas Prices Give Economy a Headache

Main Street and Wall Street finally admit financial pain

By Wesley Oliver,  Newser Staff

Posted May 24, 2008 3:52 PM CDT
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(Newser) – Oil prices gushed for 5 years, but the US economy remained blissfully unaffected—until now, the Los Angeles Times reports. Rising gas prices have finally spooked consumers and sparked ominous news from two major airlines, Ford, and even memory card maker SanDisk. “The economic outlook has been taken hostage by the relentless surge in oil prices,” said one economist.

One expert has warned that the airline industry may never recover, because "it can’t survive $130-a-barrel oil." But an economist countered that oil prices "aren’t straws that break the economy’s back." To cope, Americans are driving less, and, to Washington’s chagrin, using their tax rebate checks to offset prices that could hit $4.75 per gallon this summer.

Ford is abandoning any hope of making a profit this year or next since sales of its gas-guzzling pickup trucks and Explorer sport utility vehicles have plunged.
Ford is abandoning any hope of making a profit this year or next since sales of its gas-guzzling pickup trucks and Explorer sport utility vehicles have plunged.   (AP Photo/Gary Malerba)
Gas prices are expected to increase--possibly to $4.75 a gallon--since Americans drive more during the summer.
Gas prices are expected to increase--possibly to $4.75 a gallon--since Americans drive more during the summer.   (AP Photo/Paul Sakuma)
The nation's economy and financial markets remained blissfully unruffled by oil's upward march during most of the last five years, until this week.
The nation's economy and financial markets remained blissfully unruffled by oil's upward march during most of the last five years, until this week.   (AP Photo/Don Ryan)
The Transportation Department said the number of highway miles traveled by Americans in March fell a record 4.3% from a year earlier.
The Transportation Department said the number of highway miles traveled by Americans in March fell a record 4.3% from a year earlier.   (AP Photo)
High gas prices are posted at both a Valero gas station, which is a Exxon-branded gas station, and Shell gas stations.
High gas prices are posted at both a Valero gas station, which is a Exxon-branded gas station, and Shell gas stations.   (AP Photo/Paul Sakuma)
Higher gas prices could spell trouble for the whole economy.
Higher gas prices could spell trouble for the whole economy.   (AP Photo/Richard Drew)
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How does gas price get figured out?
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United Airlines • Ford • American Airlines • US economy • gas prices • oil price • drivers

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