Green: Fretting at the Gas Pump

0 to $2.98, according to the American Automobile Association. That’s 35 cents higher than a year ago. And it’s Christmas time, when people are driving to the mall and preparing to visit family.

So how much should people worry?

In macroeconomic terms, probably not so much, at least for the time being. On average, consumers spend only about 3 percent of their disposable income on gas. Upper-middle-class and wealthy consumers can afford the increased cost, especially since their stock portfolios are up. That may be why retailers don’t seem particularly worried. But there is pain for the less fortunate, especially unemployed people who need to drive long distances looking for work.

That pain is likely to worsen, most energy experts say. Gasoline prices are bound to decline in January, when driving is way down. But by spring, predicts Tom Kloza, the chief oil analyst at the Oil Price Information Service, prices at the pump could rise to anywhere from $3.10 to $3.50.

He notes that high gasoline prices can have a strong psychological impact on shoppers because gas stations advertise their prices on nearly every street corner. And several Wall Street analysts are predicting $100 a barrel oil in 2011, breaking through the recent $75 to $90 range.

From an environmental standpoint, there is a positive side: higher oil and gasoline prices encourage conservation. The higher gasoline prices are, the more likely it is that shoppers will buy smaller vehicles and fewer gas-guzzling S.U.V’s. The economics of the electric and hybrid cars now going on sale would also improve.

So how high will oil and gasoline prices go? They are not likely to reach the highs of three summers ago — $147 a barrel oil and $4 a gallon gasoline – anytime soon. But Chinese oil imports are soaring, and once the American economy recovers, watch out.

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