High Gas Prices Give Economy a Headache

Oil prices gushed for 5 years, but the US economy remained blissfully unaffected—until now, the Los Angeles Times reports. Rising gas prices have finally spooked consumers and sparked ominous news from two major airlines, Ford, and even memory card maker SanDisk. “The economic outlook has been taken hostage by the relentless surge in oil prices,” said one economist.

One expert has warned that the airline industry may never recover, because "it can’t survive $130-a-barrel oil." But an economist countered that oil prices "aren’t straws that break the economy’s back." To cope, Americans are driving less, and, to Washington’s chagrin, using their tax rebate checks to offset prices that could hit $4.75 per gallon this summer. (More gas prices stories.)