Oil prices rose another four-percent Thursday to a new record high of over $44 per barrel. Worries over the negative economic impact of higher priced gasoline sent U.S. stock prices sharply lower.
Oil prices have risen by nearly one-third so far this year. Prices were up over $1.60 on Thursday to $44.45 a barrel in New York. Oil analysts were focused on the continuing turmoil in Russia where the government has been on a collision course with the management of Yukos, a major Russian producer and exporter. There is continuing concern about terrorism with experts saying up to $10 in the current price is a terrorism risk premium. In addition, there is concern about potential supply disruptions in Iraq, Saudi Arabia, Nigeria and Venezuela.
Here in the United States the main worry is the impact of higher priced gasoline. The persistence of higher gasoline prices has clearly slowed what had been a fast growing economy. Michael Niemira, chief economist at the International Council of Shopping Centers, tells Bloomberg News that higher transportation costs are beginning to keep consumers away from shopping malls. He says lower income people are suffering the most.
"Absolutely, we did a survey about a month ago that found that the impact [of higher priced gasoline] is disproportionately at the low end," he said. "And that is a problem for some retailers including Wal-Mart, that does appeal to the lower end consumer."
The stock market fell sharply Thursday on what analysts called a delayed response to persistently high oil prices. The big drops in both the Dow Jones and Nasdaq indexes were blamed on higher oil prices.