The return of oil price shock

Higher energy prices are a sign the economy is getting better. But with oil nearing $80 and gas inching toward $3, some fear a further spike could derail a recovery.

NEW YORK (CNNMoney.com) — Oil prices are back around $80 a barrel for the first time in nearly a year. But is that good news or bad news for the economy? Let the debate begin.

Of course, the knee-jerk reaction is to declare that rising oil prices must be a bad sign. After all, increased energy prices could be considered the equivalent of a big fat tax increase for an already cash-strapped consumer.

Even though people don’t have to pony up four Andrew Jacksons to buy an actual barrel of oil, rising crude prices obviously hurt consumers at the pump.

And in just the past week the nationwide average price of a gallon of gasoline increased by 10 cents, or about 4%, to $2.58, according to motorist group AAA.

On the other hand, oil prices were hovering around a low of near $30 a barrel back in February. And at that time, the average price of gas was below $2 a gallon. But how good did you feel about the economy back then?

CNN