Oil prices ticked up 19 cents Monday to finish at $89.38 per barrel on the New York Mercantile Exchange—the highest close for crude since Oct., 2008.
Cold weather in the Northeast has led to high demand for heating oil, and investors were also spurred by rumblings that the Federal Reserve may soon prepare a new round of monetary easing aimed at jump-starting the economy—a move that would put further upward pressure on oil.
At the pump, prices have jumped along with crude over the past month—despite consistently low consumer demand for gasoline. In much of the country, prices have risen by more than 30 cents compared to a year ago, with parts of the Northeast experiencing a hike of more than 40 cents.
Analysts say that if crude oil prices hold steady in the $90 range, the national average cost of a gallon of gas could hit $3 by the end of the year—though consumers in many parts of the country have been paying at least that much for most this year.
According to analysts at Cameron Hanover (as reported by the Associated Press), for every penny the price of gas goes up, Americans spend an additional $4 million on oil. And as The Atlantic‘s Lisa Margonelli points out, higher gas prices could put a significant strain on any potential economic recovery:
“This is a big hemorrhage of money that could be put to other uses that would boost our economy… A jump in the price of gas will fall disproportionately on the shoulders of the middle class. Families making $50,000 a year already spend an average of $7,900 annually on their cars, maintenance and fuel, according to the GAO. That’s more than they spend on taxes or health care—two costs the Republicans and Democrats have made their respective signature issues.”