Gas prices jumped overnight in Maryland and nationally as the ransomware hack of the 5,500-mile Colonial Pipeline resulted in fuel shortages and some panic buying across the Eastern seaboard.
Gas prices in Maryland are now above $3 per gallon. They were $1.88 per gallon a year ago, according to AAA.
Here on the Shore, gas prices average $2.96 per gallon, up from $1.81 a year ago.
The pipeline is up and running again after hackers shut it down. But higher gas prices are not the only inflationary item confronting the economy, consumers and businesses.
Inflation could be a major concern for an economy still challenged by the coronavirus, government restrictions and a segment of consumers who remain skittish about venturing out — even if they have been fully vaccinated.
On the Shore, inflation impacts everything from tourism and agriculture to restaurants and construction.
The Consumer Price Index rose 4.2% in April — the biggest gain since 2008.
That was when gas prices rose to more than $4 per gallon. Inflation in 2008 also preceded the subprime mortgage crisis and the financial and real estate collapse that helped propel Barack Obama’s presidential victory.
We do not want an economic repeat of 2008.
Fast forward to 2021, consumers and small businesses don’t need economists or the media to tell them about inflation. They see at the grocery store with prices up significantly for chicken breasts, eggs, condiments, produce and other items.
Increased food prices impact consumers, especially lower-income households, as well as restaurants. Both of those groups have been hit hard by pandemic and government restrictions.
The price of lumber and other raw materials are also up, impacting contractors and home builders.
It also does not take an economist to tell us some of the drivers of inflation. The U.S. government has spent $2.56 trillion in response to the pandemic during both the Trump and now Biden administrations, according to the U.S. Treasury Department.
State governments have also spent significant sums to help unemployed workers, small businesses and the health care industry during the coronavirus. Biden is proposing even more big spending on infrastructure and Green New Deal items.
Gov. Larry Hogan and his cohorts in the region (including New York Gov. Andrew Cuomo) are asking Congress to put $1 billion toward cleaning up the Chesapeake Bay.
COVID stimulus programs have been replicated across the globe with central banks and governments pumping more money into their economies. COVID relief — especially to small businesses, restaurants and hard-hit workers — was needed and essential during the depths of the pandemic.
Even more jobs and businesses would have been erased without those efforts, even with some of the political problems with such spending. Desperate times certainly have called for desperate measures.
But now we are facing inflationary challenges that again threaten those making more modest incomes and small businesses. It appears to be another challenge for our already challenged economy and workforce.
It’s also something not to be discounted and should be an integral part of discussion on spending and monetary policies.
Otherwise, we could be looking at more economic challenges for some more desperate times.