Families are on edge, and with good reason. Energy prices, according to the Bureau of Labor Statistics continued their nine month rise in March with the energy index of prices increasing 3.5%. When we break out the sources of energy, the increases become a bit more scarier depending on what we use the most.
For example, drivers have been feeling the heat at the pump. The gasoline index increased 5.6% in March. One can only imagine what the increase may be over the summer when we take our kids on vacation.
The winter months may not have been kind to us either, as the fuel oil index climbed 37.2% over the past six months and 6.2% in the month of March alone.
On the other hand, we may have been watching television with the lights off as electricity climbed less than one percent in March while the natural gas price index fell 1.4%.
But while we were at home, our incomes were falling. Although our hourly average earnings were unchanged between February and March, the increase in consumer prices brought our real pay down.
Ironically, even in the face of rising prices, consumers overall have expressed a growing positive sentiment toward the economy. According to the Thomson Reuters/University of Michigan Consumer Sentiment Survey, consumer outlook on their future economic prospects have been increasingly positive as the consumer sentiment index increased to 69.6% in April versus 67.5% in March.
The economy’s slow but positive job growth performance may have had something to do with the positive sentiment. Payrolls increased by approximately 216,000 jobs in March, while productivity in the last quarter of 2010 increased 2.7%.
Energy costs can be a dampener on the good times for sure. As African Americans struggle with an unemployment rate of 15.3%, our need to hit the road and job search becomes more expensive.
And it is not like technology helps mitigate the cost of our job search in the face of rising fuel prices. Given that we tend to access the Internet via mobile devices more frequently than whites and Hispanics, we are probably having a lot more difficulty sending resumes online.
Are we going to see five dollar a gallon gas prices soon? Probably not. At least not for a couple more months before the summer driving season perks up. The price for a barrel of oil has fallen $2.19 from last week. It is currently at $108.11 (at least at the second I wrote $108.11). The price for a barrel of oil got as high as $145.29 on July 3, 2008, but any tensions in the Middle East at that time do not compare to the sequential political unrest today in the region.
But while increasing oil prices may result in price increases for other goods and services, increasing energy prices may mean an increase in demand for goods and services. For example, Janet Yellen, Vice Chairman of the Board of Governors of the Federal Reserve commented on April 11 that increases in oil prices may be due to increases in global demand, particularly from China, and disruptions to oil supply.
Whether we go over the edge in terms of cutting back on our energy usage, or drive time in our vehicles, will likely depend on how long the unrest in the Middle East and North Africa continues to disrupt oil supplies, and whether wage growth in the United States remains flat.