Oil prices have doubled since winter, and gas prices are climbing as well. Is an economic recovery actually pinching consumers?
Priya David: Al Pankin's U.S. Auto School has been teaching Brooklyn how to drive for over 65 years. But, for his fuel intensive business, when gas prices go up, profits go down. Alvin Pankin: Which is just going out to tailpipe with the cost. With gasoline gas car is always in low gear, it's never on the highway, where if a car is supposed to get 25 miles to the gallon, we are getting 13, we are getting half. Priya David: Many small businesses and consumers are feeling the steady creep in the price of energy. Oil prices have doubled since the winter and gasoline prices are up from a nationwide average of $1.62 in December to $2.66 a gallon, with some as high as $3 a gallon and beyond. In part, the spike is seasonal, but it is also being driven up by investors who believe the economy is starting to improve. However, rising prices could slow down the pace of any recovery before it even gets off the ground. David Wyss: When oil prices drop from $148 a barrel down to under $40 a barrel, it added about $250 billion to household purchasing power in the United States. The rise in oil prices over the last 3 months has taken about a third of that back away. Priya David: High gas prices have discouraged Al Pankin from expanding. Alvin Pankin: I have put a hold on hiring any more employees in my office. Priya David: Another worry, rising mortgage rates, which climbed from 5% to a peak of 5.81 in just two weeks, still historically low, but which could cut off signs of resurgence in the housing market. Jay Bryson: People are still a little bit concerned about their jobs, about the state of the economy right now, so I don't see them rushing out and buying a house. Perhaps they decided to wait for rates to come back down again. Priya David: Like higher oil prices, many believe the rise is mortgage rates reflects increased economic activity, but analysts warn if cost to consumers and businesses increase too much, the economic engine will stall. Priya David, CBS News, New York.
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