From Morgan Stanley economist Richard Berner's September 2nd comments:
The impact of this shock on consumers nationally will likely be significant and sharp, even if it is temporary. To illustrate, a move to $3/gallon for regular gasoline quotes in September with no change in volumes would likely boost gasoline outlays by $90 billion annualized over July’s level. Given the jump in wholesale quotes, prices at the pump could well rise further. Current quotes for heating oil, natural gas, and electricity might eventually add $50 billion to the energy bill, although the bulk won’t arrive until the fall brings cooler weather. The total would represent a short-term $140 billion (1.5%) annualized hit to discretionary spending power, and it will fall disproportionately on lower-income consumers. Inevitably, in my view, such a sharp hike will trigger much slower gains in non-energy spending.
...investors need to understand that the downside risks to the economic outlook have increased significantly, as has the uncertainty surrounding any forecast. For example, the surge in wholesale gasoline prices has yet to be felt fully at the pump, and thus in consumers’ discretionary purchasing power... risky asset markets and analysts who cover them seem to be dismissing the short-term pain, looking through any growth shortfall. In contrast, investors seem to be ignoring the potential inflationary impact of this shock... that could ultimately be the biggest risk of all to investors.