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    Rising Gas Prices Curb Consumer Spending

    Nielsen Co. report underscores impact gas sales has on economy.

    SCHAUMBURG, Ill. -- Increases at the gas pump are decreasing overall consumer spending specifically retail, entertainment and dining out, according to a report released by The Nielsen Co., parent of Convenience Store News.

    "With gas prices expected to hit $4 per gallon this year, consumers will be spending nearly a fifth of their household budget on gas," Todd Hale, senior vice president, Consumer & Shopper Insights for Nielsen Consumer Panel Services, said in a statement. "That kind of increase has a direct impact on what they can afford to spend and is something retailers will need to address."

    In 2007, for example, the gas portion of consumers' weekly spending ranged from 12 to 16 percent, the report found. As gas prices continue to increase, Nielsen expects this number to rise to 19 percent.

    With more than 146,000 U.S. locations, convenience stores are the preferred stop for consumers, attracting nine times more gas buyers than warehouse clubs or grocery stores, according to Nielsen research.

    According to the study, the amount of money consumers spent on gas each week increased significantly along with rising gas prices. Per trip spending, for example, rose to 40 percent -- from $24.42 per trip when gas was at its lowest price to $34.11 when gas prices peaked. A 46 percent increase was also realized in weekly per household gas spending from $32.02 to $46.72.

    To attract consumers who are looking to limit their drive time, some convenience stores are placing a stronger focus on their foodservice operation in hopes of taking business from competing fast food establishments and restaurants.

    "Consumers tell us they are combining errands and trips, eating out less and doing more things at home to counterbalance rising gas prices," Hale said in a released report. "Nevertheless, the amount of money spent on gas each week is still taking a huge bite out of consumers' budgets."

    Not all analysis is dire, however. According to Ben Brockwell, director of the Oil Price Information Service in Wall, N.J., consumers will get relief at the pump sooner than later. "I believe this is a market in transition," Brockwell told the Wisconsin State Journal. "I believe it is a market that will be lower in price."

    During a recent meeting with members of the Wisconsin Petroleum Marketers and Convenience Store Association, Brockwell told concerned members that oil prices now are propped up by commodity traders and the weak U.S. dollar, and eventually oil will fall, which also will bring down pump prices, reported the Wisconsin State Journal. He estimates oil will trade at $80 per barrel before year-end.

    Despite optimistic predictions, Dan Gilligan, president of the Petroleum Marketers Association of America, told the newspaper that prices nationwide are alarming. "Independent petroleum marketers across the country are in uncharted water," he said. "Never before in history have petroleum marketers had to live with the high prices we have over an extended period and there's no end in sight."

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