Economic Tax of Gas Prices

Gas prices oscillated between $1 and $2 for the first half of the decade giving Americans a stable expectation of gas expenses as a portion of their income. But 2005 saw a break out of this range and a large run as the global growth story took hold and commodities surged higher. Average U.S. jumped from under $2.00 per gallon in 2004 to peak at $4.05 on July 14, 2008, a greater than 100% rise in prices.

These high prices were unsustainable though and as the global economy fell off a cliff in late 2008, gas prices plunged 60% in 6 months offering Americans the likes of a substantial tax break. Yet, since the December 29, 2008 low of $1.59 gas prices have been steadily climbing. Weekly average gas prices hit $2.64 last week, a 66% bounce off the lows. Higher gasoline prices affect consumers' ability to spend acting as a hidden tax on their consumption.