Consumers stung by record gas prices

Gas nears $3.13 a gallon to reach sixth straight record high; retailers say price spike forcing consumers to cut back on other purchases.

By Chris Isidore, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- A new survey by the National Retail Federation said rising gasoline prices are a growing worry for consumers and retailers as prices at the pump hit a record high for a sixth straight day Friday.

The motorist group AAA said the average price for a gallon of self-serve unleaded hit $3.129 in its latest reading, based on a daily survey of up to 85,000 gas stations. That's up from Thursday's record of $3.114.

The nation's retailers say soaring gas prices are prompting U.S. consumers to cut back on their purchases and shopping trips.
The nation's retailers say soaring gas prices are prompting U.S. consumers to cut back on their purchases and shopping trips.

The group warned in congressional testimony this week it believes that more record prices could be on the way. It's forecasting prices will approach $3.25 a gallon over the next 60 days.

The run-up in prices is a big concern for store chains, according to the retailers' trade group. Its survey of consumers released early Friday found the average consumer believes that the price of gas will reach $3.32 per gallon by Father's Day.

As a result, 40.2 percent of consumers are taking fewer shopping trips, while 37.9 percent told the survey they plan to shop closer to home (37.9%). In addition, 30.7 percent said they are shopping for sales more often and 23.5 percent are using more coupons.

Perhaps of greatest concern to the retailers, 24.1 percent said they are spending less on clothing, while only one in five have delayed major purchases, such as a car, television or furniture, and 31.1 percent are dining out less.

"Consumers are entering the summer season with a cautious view of increasing gas prices," NRF President and CEO Tracy Mullin said. "To offset the effects of higher prices, more consumers are giving their wallets a little extra cushion by cutting back on discretionary spending or choosing to frequent retailers closer to home."

Interestingly enough, the retailers' survey also found that 32.6 percent have decreased their vacation travel plans this year. But a survey by AAA released Thursday showed a record number of Americans are planning to drive 50 miles or more over the Memorial Day holiday, the traditional start of the summer travel season.

Major retailers were reporting weak April sales even before the recent spike in gasoline prices started earlier this month. Wal-Mart Stores (Charts, Fortune 500), the world's largest retailer, had its worst sales comparison on record in April as it forecast essentially flat sales at stores open at least a year in May, a closely watched measure of retail strength known as same-store sales.

Overall same-store sales in April were among the weakest on record as other major retailers including Target (Charts, Fortune 500), Gap (Charts, Fortune 500), Federated Department Stores (Charts, Fortune 500) and J.C. Penney (Charts, Fortune 500) all reported declines in that key sales measure.

Topping post-Katrina records

Before this week's series of record-high gas prices, the highest price ever recorded in the survey was $3.057, which was set Sept. 4 and Sept. 5, 2005, in the wake of Hurricane Katrina, which disrupted refinery operations and pipelines and caused a temporary spike in prices. The only other time that the AAA national average has topped the $3 mark was in August 2006, after Israel invaded Lebanon and oil futures shot higher. Gas prices topped out at $3.036 in that spike.

But problems in gasoline supplies and refinery output sent the average gas price above the $3 a gallon mark on May 4, and it's been climbing relatively steadily since. On Sunday it set a new record, reaching $3.0637, and it's been up from there each day since.

Prices are now up 2.9 percent in just the last week, and have risen 9.1 percent over the last month.

California had the highest average price, with a gallon of self-serve unleaded costing $3.461, $3.467, although that's down slightly from the $3.467 level in the Thursday reading.

South Carolina continues to have the cheapest gas in the survey, but it is also creeping toward the mark of $3 a gallon, with an average price of $2.896, up from $2.864 Thursday.

The state-by-state breakdown shows 38 states and the District of Columbia now have average prices at or above $3 a gallon, with Massachusetts, North Carolina Georgia and Arkansas being the latest to cross that threshold in Friday's reading.

And Vermont and oil rich Alaska are poised to be the next states to cross that benchmark, with each about a penny a gallon or less away from the $3 mark.

The Energy Information Administration's weekly survey of service station prices also found Monday a new record high of $3.10 a gallon for unleaded. That was up 5 cents from a week earlier and up 16 percent over year-ago levels.

While crude oil prices have fallen over the last few weeks and oil supplies are high in the United States, problems at several refineries have crimped gasoline output ahead of the summer driving season.

The refinery problems include fires, power outages, and longer-than-usual maintenance periods.

Big Oil went on the defensive Wednesday, getting grilled before a House panel and denying accusations that mismanagement and a lack of competition are the reasons behind this spring's record gasoline prices. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.