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CNBC Covers Nationwide Price Spike

CNBC had a segment last night noting that gas prices this year are a notable 20 cents higher per gallon than they were last summer.  The full video is available below, followed by a notable excerpt.

The following exchange between the host, Patrick Deehan, and Stephen Shork stands out from the rest of the segment.

Host: So here is the question, Patrick. It used to be that four bucks a gallon was the break even point. How do we know that’s not the case? Americans are very adept at dealing with new things. Is there a breaking point for the average American family? Five bucks? X bucks?

Patrick Deehan of Gasbuddy:  There certainly is. Five bucks is the next psychological breaking point. We’ve seen it in some rural stations or perhaps in California and isolated basis, but about not even in Chicago have we seen regular gas over $5 a gallon. So that is the next breaking point. How close are we? That’s a discussion for another day. But for now I think that is the next point where you see demand start to crumble.

The segment goes on in an attempt to put current gas woes in context. How big of a dent has the recent spike put in the average American budget? Why are some areas of the country affected more than others.

Host: There are parts of America, Hawaii, you can understand why prices are so high. They have to get the fuel there. But then there are certain areas like Charleston, South Carolina which is the lowest price but there is not a lot of fuel terminals necessarily near there. Is there any rhyme or reason to gas pricing in your mind?

Stephen Schork of The Schork Report: Well, you do have a state by state basis the taxing information where of course taxes in South Carolina will be much lower relative to Illinois. Illinois has the double whammy of a higher tax policy and a significant amount of refinery downturns this spring and into summer. We have a ton of oil, we just don’t have the capacity to turn it into gasoline. Minneapolis and Chicago, have seen massive spikes.

Gasoline right now at $3.61, you know, is cheaper today than it was in 1981, adjusted for inflation. So at that point, we also have personal consumption expenditures. A lot more of other money was going to gasoline in ’81 than it is today. So you put together that gasoline prices today especially at $3.61 is are not as dear as they were 30 years ago and less of our dollar goes towards energy, demand is strong because US consumers can afford these prices.

We felt this was one of the rare occasions in which CNBC offered some significant insight into current events regarding fuel prices. We hope you found it useful.

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