As Americans across the country gear up for Memorial Day, they have welcomed the recent dip in gas prices. Although gas prices are down nearly 20 cents per gallon from one month ago, the average price in the United States remains uncomfortably high at $3.68 per gallon. AAA projects Memorial Day travel will be similar to that of 2011, slightly increasing by 1.2 percent.
The news, really, is that these high gas prices aren’t news anymore. Consumers have grown accustomed to $3.50 or $4 per gallon on the signs at gas stations, as long as the prices aren’t consistently spiking upward. This becomes problematic when it allows policymakers to put gas prices on the back burner, because these currently high prices are draining the wallets of millions of Americans and are taking a toll on businesses that have to pass the costs on to consumers or absorb the costs.
In a recent Small Business & Entrepreneurship Council poll, 40 percent of small businesses responding said they have had to increase their prices. Consumer demand is already down, and passing the costs of higher energy prices to consumers will suppress demand even further, causing lower output, lower income, and higher unemployment. A new study by Bankrate, Inc., found that nearly 60 percent of Americans cut back on spending in 2012 because of high gas prices.