CNN Money reports:
Get ready for sticker shock at the gas station if you’re one of the estimated 41.5 million Americans hitting the roads this Memorial Day weekend. Gone are the days of $2-a-gallon gasoline. A spike in crude oil prices has lifted the national average price of gas by 31% over the past year, according to AAA.
The rebound in oil prices from the crash of 2015-2016 was engineered in large part by OPEC. The oil cartel teamed up with Russia to slash production beginning in early 2017 in a bid to fix a supply glut. That strategy eventually worked and global oil stockpiles, especially in the United States, have declined steadily.
The increased cost of fuel is already wiping out a big chunk of the benefit Americans received from the GOP tax cuts. And things could get worse as summer approaches following the administration’s standoff with Iran and a move by oil-producing nations to tighten supplies. The result: The economic and political benefits Trump and the GOP hoped to reap from cutting tax rates could be swamped by higher pump prices that Americans face every time they hit the road.
The increase in gas prices is felt most heavily by lower-income Americans — especially in the South where people drive the most — who received the smallest share of the tax-cut benefits. So the increase could hit Trump’s blue-collar Southern base the hardest while potentially eroding confidence in the economy and tamping down consumer spending, which accounts for 70 percent of economic output.