$4 gas just around the corner

That's nationwide, not just in California. Oil closed today at another all-time high of $100.88 a barrel, and with the summer driving season just around the corner, you should expect the numbers to keep going up (the latest government survey has the average price in L.A. at $3.274, up from $3.161 last week). Never mind that in a slowing economy this should not be happening. A drop in demand means lower prices, right? But the factors influencing fuel prices will often muddy up traditional economic models. And if gas goes up - a lot - it could be the tipping point for recession. From the NYT:

With growth slowing, high energy prices that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could exacerbate the nation’s economic woes, piling a fresh energy shock on top of the turmoil in credit and housing. “The effect of high oil prices today could be the difference between having a recession and not having a recession,” said Kenneth S. Rogoff, a Harvard University economist.

[CUT]

“You’re adding an oil shock on top of a crunch on credit and a housing collapse,” said Nigel Gault, an economist at Global Insight. “Even the U.S. economy cannot withstand all of that at the same time.” American consumers have responded belatedly by cutting back on their energy use. Oil demand in the United States grew by just 0.4 percent in 2007 and is expected to be flat in 2008. But global oil demand, the relentless driver behind higher prices, is still expected to increase by 1.4 million barrels a day this year, analysts estimate. That growth, from China and the Middle East, may help keep prices up, whatever happens to the American economy.