L.A. gas price increase slowing down

After last week's big run-up, an average gallon in the L.A. area rose only a little over a penny, to $3.256, according to the government survey. The increase was much smaller than in other parts of the country, especially in the East where refinery problems have jacked up prices. Still, prices are higher than at any time in two years. Oil analyst Philip Verleger tells NPR that crude prices, now in the $88-a-barrel range, are not likely to hit $100 next year, as some have forecast. He sees prices heading down.

The economic impact of oil price increases has diminished over the last 30 years. And this increase is just not that big nationwide. The interesting thing is if one looks at data on how consumers spend money, they have been cutting their expenditures on gasoline in absolute numbers for the last three years. Gasoline consumption in October, in terms of expenditures, was less than it was in the October the year before. And it'll go down further as consumers buy more and more of these new, more efficient vehicles. In actuality, the slowdown in car sales - dropping to 10 million units in 2009 - really slowed the improvement in U.S. fuel economy. If consumers buy more, that will be presumably involve many more car sales. And that will get improved fuel and consumers will be using less.