High Gas Prices a Potential Threat to Economic Growth
to the AAA Daily Fuel Gauge Report, as of August 29, 2005, retail
gasoline prices in Missouri averaged $2.49 per gallon, eleven cents
lower than the national average of $2.60. Missouri pump prices were
the 2nd lowest in the nation for the date, behind only South
Carolina at $2.45 per gallon.
However, Missouri gas prices were 36 cents higher than one month ago and 72 cents higher than the same date last year.
Diesel prices in Missouri were $2.48 per gallon, which was 17 cents lower than the current national average of $2.65.
Threat to Continued Economic Growth
Since Monday and Hurricane Katrina, gas prices in Missouri have increased to $2.60, according to the AAA report, but a special survey by the Missouri Department of Natural Resources shows a range of retail prices in the state from $2.65 to $3.00 per gallon. A news article from the Columbia Daily Tribune reports that higher gas prices should be expected although Missouri's major gasoline sources were not damaged, with the state's gas pipelines and distribution terminals reporting adequate supplies. Consumer reaction and speculation about gas prices may be the cause for some of the increase in prices at the pump.
The Gulf Coast area is home to as much as a quarter of oil and gas production in the United States. Pipelines serving some southeastern and northwestern states were damaged by the storm and prices in those states could jump 50 cents per gallon or more immediately.
So far, Missouri's economy has weathered the unusually high petroleum prices that impact almost all sectors of the economy. Although, high fuel costs remain a potential threat to future economic growth in Missouri.
An extended period with high energy prices creates inflation at both the wholesale and retail levels, as the price of fuel used in both the production and transportation of goods gets passed along to the consumer in the form of higher prices at the gas pumps and checkout lines across the state.
In effect, higher energy prices act as a direct tax on a household's disposable income and a drag on economic growth.
See Gas Prices by State.