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The latest spike in gas prices due to heightening tensions in the Middle East is having the expected effect: Consumption is falling. Consumers are taking fewer trips, substituting other ways of getting from here to there, and switching to more fuel efficient vehicles. Gasoline consumption fell 7 percent in the first six weeks of the year compared to the comparable period a year ago.
So far, though, the impact of rising oil and gas prices is the equivalent of the dog that didn’t bark. Economic growth appears to be accelerating despite rising prices. The benchmark price of Brent crude oil soared over $120 per barrel Tuesday, largely in response to fears that the confrontation with Iran will escalate in the weeks ahead.