High Gas Prices Have Ripple Effect
By Mark Martin
CBN News
July 16, 2007
CBNNews.com - The high price of fuel is affecting everything from summer travel plans to food prices.
The cost of gas is up six-cents a gallon in the last three weeks.
If you're traveling this summer, you know it's costing more than last year.
And discount airlines like Southwest are not immune.The carrier has raised fares by $10 on some routes. It's the fourth increase this year for Southwest and high fuel costs and an increase in demand are to blame.
"When Southwest raises fares, say, in Raleigh-Durham that means Delta can raise fares in Raleigh-Durham, and in Charlotte, and in Nashville, and in Jacksonville," said airline analyst Mike Boyd.
On the ground, AAA says car rental and hotel rates are also on the rise this summer.
And gas prices are climbing because fires, leaks, and floods have led to a short supply of oil at the nation's refineries.
Another reason for the high gas prices is higher oil prices. Oil hit $74 a barrel today, and some analysts believe it could soon hit $80.
And it's not just U.S. consumption that's driving oil prices. A strong global demand is pushing prices ever higher.
Food prices are climbing, too. Demand for corn to produce the alternative fuel, ethanol, pushed corn prices higher.
That's led to more expensive cattle feed which is part of the reason for near-record prices this month for milk in the U.S.
You would think all the news about price increases would cause people to just stay home.
But that's not the case. A record number of travelers are driving and flying this summer.
Analysts say it's a sign the economy is strong.
The U.S. Treasury Secretary told Fortune magazine recently that this is by far the strongest global economy he's seen in his business lifetime.
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