THESE DAYS, a trip to the gas station can wreck your afternoon -- especially if you own a burly pickup truck, or one of those SUVs that licks its chops the second you pull up to the pumps.
Gasoline prices, after hitting a multiyear low in February, have surged a numbing 39 percent, to an average retail price of $1.26 per gallon. That's a three-year high, says one government survey.
Higher gasoline prices nearly always rankle U.S. consumers, partly because we view driving a gas-guzzler as an American birthright. Pride aside, higher pump prices set us seething because they assault our pocketbooks, says Donald Ratajczak, director of the Economic Forecasting Center at Georgia State University's J. Mack Robinson College of Business.
"It's as if there was a tax increase that's taking money out of everyone's pocket," Ratajczak says.
Just how long this "tax increase" lasts has implications for U.S. economic growth, and it depends on several factors.
The first factor is OPEC, the cartel of oil producers which together pump more than one-third of the world's oil. In March, to supercharge oil prices that had dropped to their lowest in a dozen years, the group agreed to cut back on production. Oil prices have more than doubled since, and OPEC members vowed last week to continue the cutbacks to April.
Secondly, there's Asia, where financial collapses last year contributed to the global glut in oil.
During their disarray, Asian nations didn't need -- and couldn't afford -- as much of the black gold, which chilled worldwide demand. Now that economies in Asia are beginning to accelerate, demand for the liquid lubricant is spiraling even as production is being crimped -- conflicting trends that are sure-fire ingredients for higher prices.
Lastly, there's the steady rise in demand for petroleum-based products one expects with a well-oiled economy such as ours.
These three forces would seem to argue for stiffer gas-pump prices.
The Energy Information Administration, the research arm of the Department of Energy, recently predicted that gasoline prices would peak at $1.26 a gallon last month, where they would likely linger until the summer. From there, prices could possibly creep higher by 11 to 12 cents per gallon during next year's summer driving season, when demand for fuel is typically strongest.
"Gasoline prices will flatten out in the spring," says David Costello, an economist with the Energy Information Administration. "If all else stays the same, and crude prices don't go down, then it would be up from there."
Other economists think it's likely that oil and gasoline prices will decelerate over the next year. Big Oil is boosting exploration, and a mild winter would allow for a buildup in oil stores.
The capital markets, for now, seem to agree: For instance, the "futures" markets -- where investors can make high-dollar wagers on everything from the direction of interest rates to what oil will cost a year from now -- is telling market-watchers that oil prices will fall 20 percent by the end of next year, said Craig Pirrong, assistant professor of finance at Washington University's John M. Olin School of Business in St. Louis.
If prices do drop, it could be that one or more of the OPEC members reneged on their pledge to keep production low.
"Their adherence has always been more preaching than promise," Pirrong quipped.
But even if oil prices do fall, it's clear that gasoline won't return to the sub-$1 level. So we'll have less to spend -- a too-bad, so-sad scenario for an economy that draws 70 percent of its power from consumer dollars.
However, pricey petroleum has economic effects that transcend your bigger monthly Mobil bill -- known as "downstream effects."
Let's face it, changing prices change how we spend. With gas prices low, we'll buy that Ford Expedition. But with prices high, we'll buy more economical vehicles.
That could dent the earnings of the Big Three carmakers, who make most of their money off less-than-economical trucks, sport utility vehicles and minivans.
"There's a bit of a snowball effect," said Ronald Early, another economist with the Energy Information Administration.
One clear "effect" is inflation. As a commodity, petroleum is an elemental ingredient of many products: Such as those plastic Rubbermaid storage tubs we hide our junk in, or the Fisher-Price toys that clutter your family room.
Increased oil prices make manufacturing more expensive. If the price increase is temporary, manufacturers might eat the added expense. But if petroleum prices will remain high, product-producers will ratchet up sticker prices. That can ignite inflation.
With fuel prices high, shipping costs increase. Air fares rise, making it more expensive to travel and to ship goods. Indeed, thanks to the higher shipping costs and raw material prices, many companies will see their profits slump.
That could unsettle a stock market that's probably still more speculative than safe.
Indeed, an old market maxim says "every bull market has a copper ceiling." In other words, commodities such as crude oil, aluminum or copper are important enough that rising prices pack a punch more powerful than most realize.
If stock prices slump, it could tap the brakes on spending, since many consumers right now feel that their lot in life is better, thanks to swollen portfolios.
The one bright spot in the gasoline chronicles is that volatile food and energy prices are extracted from one measure of the Consumer Price Index, which is how we track inflation. This less-fickle "core" CPI is what Federal Reserve Chairman Alan Greenspan is studying as he decides whether to raise interest rates again, economists say.
If that's the case, Greenspan probably isn't yet obsessing over expensive gasoline -- unless, of course, he owns a thirsty SUV.