Gas Prices Continue To Rebound, But Consumer Confidence Remains High

As of Monday, March 2, average national gasoline prices had risen for 35 consecutive days, according to AAA’s Daily Fuel Gauge Report. Still, both the University of Michigan and The Conference Board report that consumer confidence remained high in February, in spite of slight declines in both research groups’ confidence indices.

The average national price of a gallon of regular gasoline reached $2.427 March 2, a gain of more than 37 cents from a month ago. But with prices still running more than a dollar below this time last year, the stimulative effect of the drop in fuel prices remains quite large. AAA and other observers note that some of the gains are the result of maintenance outages as refineries prepare for the switch to summer blends. In California, a major refinery fire helped prices skyrocket. But crude-oil prices have not risen as quickly as prices at the retail or wholesale levels, prompting many to expect the increases to moderate over the coming weeks.

The surge in gas prices does not appear to be affecting consumer confidence much if at all. The UM Surveys of Consumers final February survey showed a decline in the Sentiment Index to 95.4 from January’s post-recession high of 98.1. But the index rose from the mid-month reading of 93.6. Richard Curtin, the research group’s chief economist, attributed the decline more to the harsh weather in the Northeast and Midwest than to gas prices.

The Conference Board’s Consumer Confidence Index also fell to 96.4 from 103.8 in January, but the group’s Director of Economic Indicators Lynn Franco said most of the decline was a result of a drop in short-term expectations.