Published: Jan 18, 2011 10:10 PM EST
Updated: Jan 18, 2011 7:10 PM EST

Americans are starting to watch their spending more carefully as gasoline prices reach levels not seen since October 2008. Diane Swonk, chief economist at Mesirow Financial, says Thursday's government report on retail sales indicates that consumers are skipping a restaurant meal or a movie because they have to spend more to drive.

Swonk estimates gasoline prices are affecting the spending habits of more than half of U.S. drivers. The national average for a gallon of regular hit $3.10 on Monday, according to AAA, Wright Express and the Oil Price Information Service. That's about 12 cents more than a month ago and 42 cents more than on Labor Day.

Motorists in some states - including Oregon, California, Washington and New York - are paying from $3.20 to $3.71 a gallon or more. The average price in those states could top $4 a gallon by spring.

For every penny the price at the pump increases, it costs consumers overall an additional $4 million, according to Cameron Hanover analyst Peter Beutel. If the price goes up a dime, it means consumers pay $40 million more each day that 10-cent hike is in place.

Swonk noticed consumers starting to make trade-offs in November and December. "As we moved into December, even some of their gift purchases were curtailed as prices at the pump continued to escalate," she said.

Swonk says economists at Mesirow "think of higher commodities prices as more of a threat to demand than inflation at this stage of the game. On Friday, the Labor Department said that excluding gas and food prices, there is little growth in inflation at the consumer level.

Americans are seeing more take-home pay, thanks to the 2 percent payroll tax cuts that took effect at the start of the year. The hope is consumers will help the economy by spending more, but higher gas prices could torpedo that plan.

The last thing we really want" is to use the savings "to fill up our tanks," Swonk said. Other analysts wonder how Americans will make spending choices in the months ahead.

Gasoline is closely linked to the price of crude oil, which is at its highest level in 26 months, driven mainly by stronger demand in other countries, particularly emerging markets such as China. Benchmark crude for February delivery was little changed on the New York Mercantile Exchange, down 16 cents to settle at $91.38 a barrel.

The International Energy Agency predicted that worldwide economic growth and a cold winter in the northern hemisphere will support higher-than-expected oil demand this year. The Paris-based agency expects demand will rise to 89.1 million barrels a day - up from 87.7 million barrels a day in 2010. The IEA warned that high crude oil prices could slow economic recovery, and oil producers, investors and consumers will suffer if prices stay around $100 a barrel.

In other Nymex trading in February contracts, heating oil added 0.07 cent to settle at $2.6459 a gallon, and gasoline lost 1.54 cents to settle at $2.4792 a gallon. Natural gas March futures fell 5.5 cents to settle at $4.425 per 1,000 cubic feet. In London, Brent crude rose 37 cents to settle at $97.80 a barrel on the ICE Futures exchange.

 (Copyright 2011 by The Associated Press. All Rights Reserved.)