On average, Americans are now paying more than $3.00 per gallon for gasoline. This is roughly 40 percent higher than the cost of gasoline last January when gas hovered near $2.15 per gallon.
Higher gas prices are one reason why the economy is slowing down. With so many additional dollars being spent at the pump, there's less money for discretionary items.
But, it could be worse.
The 5-year chart above shows how gas prices are failing to keep pace with rising oil costs. From 2003-2005, the correlation was fairly strong; starting in mid-2007, it's been fairly weak.
If gas prices had been keeping pace with oil prices since last summer, Americans may have been subject to prices upwards of $5.00 per gallon nationwide.
(Image courtesy: GasBuddy.com)
