Four bucks a gallon--ouch!(ECONOMICS) (price of gasoline) (Viewpoint essay)

• Author: Strelecky, John P.

IF WE DO NOT get the price of gasoline down, and quickly, the country is headed for another recession. It is the single greatest threat to the U.S. economy right now. Consumer confidence, overall spending, and unemployment all hinge on this one issue. Since Jan. 1, the average price of a gallon of gas has gone from $3.36 to $3.92. Many believe the price could reach five dollars by the end of the year. If so, we will nosedive straight into a recession.

It is basic math. The average family of four uses about 162 gallons of gasoline per month. So, when gas prices go up one dollar per gallon, it is a direct financial hit of $162 to the monthly family budget--but it actually is worse. Higher gas prices mean higher food prices, too. Since it costs more to transport their goods, shippers, and then retailers, raise prices to cover their increased expenses.

Also, when fuel prices are high, farmers have an alternate market in which to sell their crops. Instead of selling to food producers, they sell to fuel producers. Why sell your corn to make cereal when you can make more by selling it to make ethanol? This shift in use means there are less crops available for food production and for feed used by egg, chicken, and cattle producers. Less supply means higher prices, and those higher prices get passed on to the consumer--and it appears that, for every dollar gas goes up, the average family loses at least $40-$50 per month due to higher food prices.

Look at what happened in 2008. Gas prices went from $2.12 per gallon in January 2007 to $4.10 in July 2008. This forced the average family to shell out an extra $320 per month just to fall their tank. Higher food prices cost them another $80-$100 per month. This tipped the scales the wrong way for a number of families, who then reached the breaking point. They could not stop buying gasoline because they had to drive to work. They could not stop buying groceries because they needed to eat. Something had to give. For many, what gave was their mortgage payments.

Many were first-time homeowners who had been convinced during the height of the lending binge that their income was sufficient to take on a mortgage and pursue home ownership--and it might have been except how could they have known they were about to take on what almost was the equivalent of a second mortgage.

From 1979-99, gas prices averaged $1.10 per gallon. It never went higher than $1.31 and was as low as $1.06 in 1998. From 2000-04, it averaged...