Rising gas prices could stall recovery - 13 WTHR Indianapolis

Rising gas prices could stall recovery

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Professor William Rieber, Butler University Professor William Rieber, Butler University
David MacAnally/Eyewitness News

Indianapolis - Pump prices jumped nearly 20 cents a gallon in just two days. Prices are up 50 cents in a month and 40 cents more than a year ago. The jump is having an impact on an economy struggling to recover from recession.

One driver looked at the $2.79 on the sign at the gas station and commented, "That hurts. That really hurts."

Another said, "I've got to go pick my wife up now on $2.50 worth of gas."

Hoosiers, along with the rest of the country, have seen fifteen straight days of gas price pops. Simultaneously, they've been hearing that the recession is likely over. But Professor William Rieber of Butler University commented, "If oil prices were to continue to rise we would pay more at the gas station and have less to spend on other items and that would dampen the economy."

$2.79 a gallon a pretty common price around the city. Indiana is number eight in the US for high gas prices.

"Even though the economy is starting to grow, unemployment is still growing. The last thing we need now would be a significant increase in oil prices and gas prices," said Rieber.

"It does hurt the economy," said Lisa.

"I just bought a home a couple weeks ago. First time home buyer," said Mike.

Consumers like Mike and Lisa want to help the economy grow but "as the gas goes up," said Mike, "That's putting a strain on where I could go. Cutting out going to restaurants things like that."

"I definitely won't be traveling. I'll stay home this holiday season," said Lisa.

Another motorist told us, "I work two jobs now. I have to not only to pay for gas but other things."

Professor Matt Will with the University of Indianapolis says prices "are increasing now for one reason. The dollar is getting weaker." He says gas around $3 a gallon won't have that much of an impact on the recovery but "there are other things in the economy that may cause a potential double dip recession but fuel prices are not a major contributing factor." Will fears the federal deficit fueled by stimulus spending more than a weakening dollar.

On the futures market Wednesday, gasoline prices fell about four percent thanks to a government report there was more gasoline on hand than first thought. Crude oil also dropped by a few dollars per barrel.

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