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LONG ISLAND LIMOS FEEL THE GAS PINCH TOO!

LONG ISLAND LIMOS FEEL THE GAS PINCH TOO!

Reuters * June 17, 2009

WASHINGTON, DC -- Limo Operators are again facing summer pain at the pump as rising crude oil prices drive up the cost of gasoline, forcing spending cuts elsewhere and threatening the fragile economic recovery.

Average U.S. gasoline prices hit $2.63 a gallon on Wednesday, up about 9 percent since the Memorial Day weekend when the summer driving season kicked off, according to data from the travel and auto group AAA.

The jump in fuel prices comes on the back of a 50 percent spike in crude prices since the start of the year. Crude oil closed above $70 a barrel on Tuesday for the first time since November.

In May, AAA said gasoline prices would not exceed $2.50 a gallon this summer, but the spike in crude prices prompted it to revise its forecast to $2.75 a gallon.

The U.S. Energy Information Administration, which forecast an average summer gasoline price of $2.21 in mid-May, said it now expects U.S. gasoline prices to continue rising to a monthly average high near $2.70 a gallon in July.

And although the forecasted highs are still a far cry from last summer's prices which exceeded $4 a gallon, some experts warn that higher prices could stifle the economic recovery.

"It doesn't really fit in with this idea that the economy is somehow going to recover sometime soon and that consumers are going to be happy. I don't think consumers are going to be happy paying $3 at the pump," said Addison Armstrong, director of market research at Tradition Energy, who predicted that prices will climb to $2.75 a gallon this summer.

With an economy that's highly dependent on consumer spending, higher gasoline prices pose a threat to broader economic recovery, said Troy Green, a spokesman for AAA.

"People are still going to drive, but they are going to spend less in other areas," Green said.

Higher prices may even cut into demand which has begun to show signs of rising against levels seen last year when pump prices over $4 a barrel lowered consumption.

"The higher these prices go, the more we'll choke off what little demand recovery we are seeing," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

"I think as a country we have to find alternatives."

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