Economy Watch: Gas Prices Pause in Upward March
- Feb 25, 2013
Gas prices did something a little unusual over the weekend: they went down slightly. According to AAA, Saturday’s national average was down a 10th of a cent per gallon compared with Friday, and Sunday’s average was down a bit more compared with Saturday, from $3.78 to $3.777 a gallon. Though minuscule, these declines were the first downward movements in the average since mid-January.
A week ago, average U.S. gas prices were $3.714 a gallon, while a month ago, the average was $3.331. The February run-up in prices has set some all-time high records for this time of the year, when prices usually rise somewhat because refineries are converting to warm-weather blends. But this year’s spike has been unusually sharp, threatening to put a damper on consumer spending, along with the uptick in payroll taxes that kicked in January 1.
Gas prices were also a little elevated in December (up about five cents compared with a year earlier), which might partly account for a drop in travel on all roads and streets year-over-year in December. According to the U.S. Department of Transportation on Friday, travel was down 2.9 percent form the month, compared with December 2011, or about 7 billion miles.
Other reasons for the drop—and the general stagnation of miles driven in the last few years—include the slow economic recovery overall and the fact that the average age of the population is increasing, since drivers over 55 tend to drive fewer miles. Also, young people are driving less than their counterparts in previous decades, according to a report by the consumer group US PIRG, because of higher gas prices, new licensing laws, improvements in technology that support alternative transportation and changes in Gen Y’s attitudes about getting around.
Truck tonnage up
Overall mileage might be down, but the American Trucking Associations’ For-Hire Truck Tonnage Index increased 2.9 percent month-over-month in January after jumping 2.4 percent in December, the organization said on Friday. Trucking serves as a barometer of the U.S. economy, according to the ATA, since it represents 67 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.
Tonnage has surged at least 2.4 percent every month since November, the ATA says, gaining a total of 9.1 percent over that period. As a result, the index came in at 125.2 in January versus 121.7 in December (2000 = 100). In fact, January 2013’s index was the highest on record.
“The trucking industry started 2013 with a bang, reflected in the best January tonnage report in five years,” ATA chief economist Bob Costello noted in a press statement. “While I believe that the overall economy will be sluggish in the first quarter, trucking likely benefited in January from an inventory destocking that transpired late last year, thus boosting volumes more than normal early this year as businesses replenish those lean inventories.”
Wall Street ended last week on an upbeat note, with the Dow Jones Industrial Average rising 119.95 points, or 0.86 percent, to end almost exactly at 14,000. The S&P 500 was up 0.88 percent, and the Nasdaq advanced 0.97 percent.