Rising gas prices could curb holiday spending

NEW YORK --- Americans are paying more for gasoline than they did last year as the holidays approached -- billions of dollars that could go to books, clothes and Barbie dolls instead being spent at the pump.

Gas averaged nearly $2.70 a gallon Friday, the highest of the year -- adding bad news to an already fragile economy and making it even less likely that people will spend their way out of the recession.

From last November to January, the average price was $1.86. Even if prices average $2.50 per gallon during the same period this year, Americans will pay an extra $26.6 billion for gas, said Tom Kloza, the chief oil analyst at Oil Price Information Service.

Americans didn't have much going for them financially in late 2008, but they did have this: Gas prices plunged by 93 cents per gallon between Oct. 30 and the end of the year. It was like a generous energy tax break, just in time for the holidays.

Thanks mostly to the weak dollar, that's no longer the case. And when a gallon of gas runs from $2.50 to $3, people begin to notice, energy experts say.

People make a "clear emotional connection" between the price of gas and how much they spend on other things, said Wendy Liebmann, who monitors shopping habits through her company WSL Strategic Retail.

"It nibbles out of our paycheck, and there's nothing we can do about it," Ms. Liebmann said. "We've got to get the kids to school. We've got to get to work if we're lucky enough to have a job."

Since March 2, the value of the dollar has fallen 18 percent against the euro. In that same period, a barrel of oil has doubled in price, to about $80. Pump prices have gone along for the ride.

Gas prices have risen 17 days in a row, hitting a national average of $2.695 per gallon Friday, according to auto club AAA, Wright Express and Oil Price Information Service.