GAS PRICES FALL

From the Detroit News. 

A week before Memorial Day and the start of the summer driving season, Metro Detroit motorists are paying less to fill up at the pump.

On Sunday, the average for a gallon of regular gasoline in Detroit was about $3.86, according to the AAA Daily Fuel Gauge Report.

That's a drop from the $4.08 average a week earlier, and far from the highest price — $4.23 — recorded May 4.

The falling prices, which reflect a national trend, are a result of several factors — including crude oil prices and less unrest in the Middle East in recent weeks, said Nancy Cain, a spokeswoman for AAA Michigan.

"Right now all the forces are combining to help the prices become lower at the pump," Cain said Sunday.

Statewide, the average price for a gallon of gas on Sunday was as low as $3.78 in Traverse City and as high as $4.08 in Marquette, according to the fuel gauge report.

The average U.S. price of a gallon of gasoline has dropped about 9 cents over the past two weeks.

A gallon of regular gasoline at about 2,500 filling stations nationwide averaged about $3.91, according to a survey by Trilby Lundberg, a California-based fuels analyst.

Prices fell last week as economic reports indicated the U.S. economic recovery is sputtering and fuel demand may decline.

This is welcome news just as we are about to hit the start of the summer convention season. While gas prices have a way to go to reach levels they were at in the beginning of the year  the prices are moving in the right direction.

Yet gas prices this high are still a problem.

Retailers are carefully watching their receipts this weekend amid signs that higher costs for raw materials and sluggish consumer spending may be hurting the recovery. 

The uncertain outlook has helped push stocks down nearly 300 points in three weeks, but with gasoline still close to $4 per gallon and food prices high as well, some merchants are doing very well indeed.

CBS News correspondent Seth Doane reports that for the tenth month in a row, consumers are opening their wallets. For example, at the "Fairway" grocery store in Manhattan, Manager Rick Garcia says shoppers are back.

"This is actually the business to be in, because everybody has to eat," Garcia said. 

While the grocery business is great for sellers right now with food prices up six to seven percent nationwide, shoppers like Jane Aschular say they have no choice but to spend more. Her bill was $40 dollars higher than usual.

"Prices have really jumped just in the last few weeks...we've been shopping here for ten years and I just know the prices of everything and they're noticeably different," Aschular said.

Roughly 70 percent of the U.S. economy is driven by consumer spending, but a closer look at the numbers reveals that, these days, people are spending more on what they have to buy - necessities like groceries and gasoline.

If you are spending more on necessities like groceries and gasoline you are going to have less to spend on leisure items. It's why high fuel and food prices can affect so much more than food or fuel.