Aren’t Lower Gas Prices The Economic Stimulus?
by Veritas ObviamGot gas yesterday in Westwood. (No, this isn’t a story about Rubio’s)
Paid $1.95. Looked around the place, saw a lot of other people paying $1.95. But nobody was smiling. Seems like we were paying at least twice that last summer, so shouldn’t we be ‘pumped’ over this reduction?
A couple rough numbers to consider (broad strokes, don’t get bogged down here): The average American drives a little over 12,000 miles a year and there are about 200 million drivers. ‘Average’ fuel economy of cars on American roads is about 20MPG so those drivers each need about 600 gallons of fuel a year.
At the beginning of last July the national average price for gas topped out at about $4.10. Last week it was under $1.70.
If levels hold (admittedly a big ‘if’), this means on an annualized basis everybody’s got over twelve hundred extra bucks to spend. More than 250 BILLION DOLLARS in American consumer pockets. And that doesn’t take into account the consumer-realized savings that cascade through every business that uses fuel in the creation or delivery of its products. Which would be, I dunno..EVERYTHING we make or sell in the U.S.!
Big news, right?
But I haven’t heard this mentioned by Anderson, Katie or Wolf. They keep saying we’re in “the worst economic downturn since the Great Depression”. It’s a constant drumbeat. And people are scared so they’re holding onto their dough. Smart economists point to the velocity of money flow as an important indicator of a healthy economy. Consumer confidence is the straw that stirs the drink. The money needs to be spent and re-spent for the economy to function properly.
So why doesn’t The Office of the Oprah-Elect want ANY good economic news out in advance of taking the reins? Because any easing of the ‘crisis’ mentality will erode the collective will of all media-susceptible Americans to accept the massive regulatory changes that are about to be enacted. Structural stuff that is not easily undone.
I think we should be afraid of that instead.
Email this to a friend | Print |
Share on Facebook
| Tweet this
| 
Follow Us on Twitter
Subscribe via RSS
Tips & Feedback
36 Comments
When the prices were high, it was W’s fault. Now that they’re low, silence.
GM is counting on high prices to sell their new hybrids which they are leveraging to get this bailout loan. What happens if nobody wants their hybrids? They’ll just file bankruptcy and the tax payers are out billions of dollars.
And the GM execs will still get their bonuses.
Worst economy in 70 years… With our iPods, HD TVs, and dollar meals at McDonald’s (seven cents in 1937 dollars).
For years, I’ve heard on the radio PSAs encouraging people to save money, pay down debt, and spend less than they make… and when we do finally, it’s BAD news economically…
Soon after Obama takes office we will begin to get stories of the big improvement in our economic situation that has taken place since the inaguration. Never mind that things had changed direction and were cautiously heading up while Bush was still in office, that will not be part of the story, never happened. It will all be the doing of “The One” and his brilliant leadership.
I think we should be afraid of using our real names. That’s real scary.
I drive as part of my job, so I’m closer to 45,000 miles a year (although I have a car with much higher MPG), so this has been a particularly good few months. Which is good, considering the last stimulus package (you know, the one we’ll be paying interest on for a couple of decades) was “donated” to the IRS over a past debt that I’m currently paying off. With any luck, they’ll do the same thing this time so the IRS will have enough money to go to Wal-Mart.
Another reason that there must be no good news ahead of the inauguration is that, were things to appear better, The One® couldn’t take credit for it.
Trust me, come January 20th around noon, things will start getting better.
I’m sure the sale of airline bags in red states will save the economy post-inauguration, with all the media slurping on the horizon post Jan. 20.
Yes gas prices will help, but energy prices are not down. The Gas used my companies is only part of there cost. Energy to run manufacturing is still very high. This needs to come down also, but it is not following gas rates.
12,000 mile a year!!!. I do’nt think so, more like 18 to 20 thousand
I noticed the media ignoring the sweet prices at the pump. Seriously, I never thought I’d see “1″ in that first column.
Worse, this morning on either the Today Show or some useless local new program, I saw some teleprompter-reader report on the 12 cent increase in average gas prices. What?!?
It went down TWO DOLLARS without cheering. Average Americans could care less about 12 cents as long as we see that miraculous first digit.
The average American is a lemming of the media. They do not question they do as they are told. Believe as they are told. Not enough free thinking self thinking Americans. That is the issue we are truly facing.
Low gas prices represent the oil companies relaxing the pressure they applied to get drilling rights passed as emergency measures.
If you looked today you would see that its back above $2
@ Reality “Low gas prices represent the oil companies relaxing the pressure they applied to get drilling rights passed as emergency measures.”
Wow I though it was cause the price went from $100+ per barrel to under $40. And that price spike had more to do with the saber rattling at Iran than wanting to drill.
Guys the prices are going back up. Though Lurker they are 1.75 here where I live. I think they are blaming Israel’s Hamas problem. At least our buddies at OPEC are. I can’t wait to get my Volt. I got yer gas money right here OPEC….
I think that prices are going back up as well. There just can’t be much downside left. That said I was capped my price at $1.747 at petrofix.com. We will see where gas goes. Personally I think higher.
test
Low prices are nothing more or less than a reflection of the law of supply and demand.
REALITY-
You’ve listened to too many sound bytes on TV. The oil companies have little say in what gas prices are. The prices are set largely by OPEC. Whenever they decide to boost up the prices on the pump, they cut back on production. When the price gets high enough, they raise production to take advantage of the high prices. They are the key manipulators. The other manipulators of late were the insane actions on Wall Street.
The anomaly we’ve recently experienced with prices dropping below $2.00/gallon was due to many factors:
http://www.voanews.com/english/2008-12-12-voa52.cfm
Gasoline prices usually go up this time of year, we’ll see how much.
Extra money to spend? No, not really.
Have you noticed with all the price spikes up over the years the talk immediately turns to oil company conspiracies, politicians demand investigations – but when they go down – nothing is said.
Interesting fact: at any time since September 2001, over 50 % of Americans believed that we were in a recession or about to enter one. They were wrong every day until late 2007. For much of that time, we had excellent growth and around 5 % unemployment, which is lower than the average of the Clinton years.
Who caused that impression? Who was tryin to talk down the economy? Take a wild guess. And people believed it, presumably the same majority of people who did not know in November 08 which party controlled congress but who were sure that Sarah Palin was just stooopid.
Last year we were being told by Nancy Pelosi that despite sky-high gas prices “we cannot drill our way out of this”. (Of course now we are being assured that we can SPEND our way out of this, but I digress)
At the same time, Chuck Schumer (D-NY) was quite sure that Saudi Arabia could. Schumer on the Senate floor in May 2008: “If Saudi Arabia were to increase its production by 1 million barrels per day that translates to a reduction of 20 percent to 25 percent in the world price of crude oil, and crude oil prices could fall by more than $25 dollar per barrel from its current level of $126 per barrel (…) In turn, that would lower the price of gasoline between 13 percent and 17 percent, or by more than 62 cents off the expected summer regular-grade price – offering much needed relief to struggling families”
1 million barrels per day? We could do 2 million more offshore and in Alaska. The money could stay here and we would create tens of thousands of jobs – not subsidized make work schemes, but jobs that pay for themselves. But that would be private enterprise, which they have no use for, and the oil industry is not a constituency of the Democrats. So, more money to Saudi Arabia.
Think about that when gas prices go up again.
You are being lied to. Pelosi was lying. Schumer is lying, too, in part because he cannot know to the last cent how much money will be saved but mostly because he also opposes domestic oil production.
Now the EPA will be run by global warming fundamentalists who have vowed to fulfill Obama´s underreported promise to bankrupt the coal industry. No nuclear energy, no coal, “oil makes us sick” (Harry Reid). Well, you can´t run the country on windmills and solar and that´s no lie.
“The Grapes of Math.”
That should be the title of a film yet to be produced about the inevitable implosion of the global financial world brought on by the 21st Century Gold Dust Bowl equivalent of the Depression-era Dust Bowl.
It might begin showing an impoverished hedge fund manager abandoning his summer house in The Hamptons, loading his family into a Bentley, Range Rover, or Mercedes 4×4 otherwise full of heirloom objets d’ art, designer work clothes, and driving away dejected — followed, of course, by a 16′ bed U-Haul truck driven by the butler accompanied by the chef, nanny, and personal assistant and full of the necessities of their new life in their remote Idaho “survival compound” where the fellow will heroically work his trading accounts online to stage a miraculous comeback.
Instead of ensuring the family Bible makes the journey with them, he’ll reverently stow away his Rolodex and Blackberries loaded with the contacts he’ll need to efffect his rebirth.
Between the mess over in Israel and it being the beginning of the New Year, it’s natural that gas prices are going up. But come on! Paying $2.00 or a shade under for a gallon of gas is infinitely better than what we were all dealing with last summer. As someone pointed out, however, no where is GWB getting any credit for the price of gas going down, yet it was all his fault when it peaked around $4.
Apparently I’m the only one who has noticed that gas prices have risen at the pump by twenty cents per gallon over the past week. Just when they have lulled you into a false sense of security in lower gas prices they begin to inch them up again. Remember, Obama is the guy who said he thinks gas prices should be about $4 per gallon. These people do not want us to drive vehicles with internal combustion engines and gradually they will make it unaffordable to do so, one way or another. What happened to all the “We’ll get to the bottom of these high gas prices” hype out of Congress? Same thing that happened last time they said this before an election – NOTHING! Fool me once, shame on you…
A few things:
I am in the a few miles away from the location mentioned, and had seen the drop and the spike.
@ El Gordo, the problem lies in that the production increase from offshore/Alaska drilling is that we would not see it for decades, and that the extra production would not remove our dependence on foreign oil, sure it would offset it but then we are only giving less to the countries that support terrorist activities.
The smart money is removing our dependence on fossil fuels altogether, Mercedes Benz thinks they can be fossil fuel free with their cars by 2015 — yes that’s a lofty goal but even if they only get 70% of that by 2017 that is a greater reduction than can be achieved by our own drilling.
@ John D: I will give all the credit to King George W. for the drop in gas prices, “go out and spend.” He was at the helm while our ship is sinking.
“There are many excuses for the high price we pay for gas, but only one reason is needed, PROFITS!”
Lurker: Look around your house and then tell me what you see there….appliances, foodstuffs, clothing, anything at all, it doesn’t matter…and then make a list of what you see there that was produced and delivered to you without a profit motive somewhere.
And can I ask what your formal training is regarding the exploration for and production of fossils fuels?
Read/watch this (from 60 minutes):
http://www.cbsnews.com/stories/2009/01/08/60minutes/main4707770.shtml
Lurker – I’m not trying to be a smart @ss, okay? But isn’t the point of being in business to turn a profit? It’s what big oil wants to do; I’ll grant you that. But it’s also what companies who make green products and enviro-friendly cars want to do, too. That’s capitalism. That’s the society in which we live. I don’t spend like money is burning a hole in my pocket nor do I hoard every last nickel I have. I’m a consumer. I buy stuff (gas, groceries, clothes and also frivolous stuff). So, I’m not going to stop being a consumer, and unless something changes, I’m going to continue being a capitalist, despite the view by some people that there’s something inherently wrong with being a capitalist.
I think a big problem is that none of the other prices that went up allegedly because of fuel costs have come down. Remember when ice cream came in half-gallon cartons, and now its around 1.5 qts for the same money?
) telephone, fuel oil, food all have gone up. When other prices start to come down, then maybe you’ll see people perk up.
It just seems like the fuel crisis was a con-job (yes there were real geo-poli-econi reasons) and retailers, manufacturers etc. decided to take advantage and stuck us with it. Cable TV (i can’t get satelite due to geography
@ Walshingham Oh yeah I have lots of stuff, although being raised on a sailboat in the Caribbean, I was raised to understand that a oneness with the earth is viable and healthy way to live. With the destruction of the local farmer all across this great land of ours by the factory farms at the cost of profits it’s the people who suffer. Which in turn creates more need to transport goods instead of producing local to sustain locally. I do see the point being made in my argument for oil drilling locally, but that will not cut our dependence.
And no I don’t want to give up my big screen and comfy couch and other stuff.
*Inserting smart alex remark* I’ve been trying for years to turn high grade natural gas into a viable energy source, although I just seem to clear the room.
@ John D: I don’t think your trying to be a smart@ss, I understand your point. I have only been driving since the mid-eighties, but I can always recall that the price of gas at the pump has been a topic every year so this cycle is nothing new. Our reduced consumption is what scared OPEC and forced them to cut production to slow the fall to buoy it back to the $50 per barrel range. And they do see their cash cow running dry and they are trying to squeeze as much profit while they can which is fine. OPEC is better at putting profits back into their system than say Venezuela is and that will cost Venezuela when their production facilities are in need of repair and upgrade.
One problem with capitalism is when the profits are put before people, example; the pharmaceutical industry is only mostly interested in treating symptoms not finding cures. (Yes I do realize the meds have helped my cancer survivor father).
The other thing I see now is that we would have to refer to the lobbyists as the secret hand of the market, as without the bailout (how is that not welfare?) capitalism is failing.
Lurker, I am shocked at the irrationality of your argument. You write the problem lies in that the production increase from offshore/Alaska drilling is that we would not see it for decades, and that the extra production would not remove our dependence on foreign oil…
First of all, we could see an increase in production within 4 years, not “decades”. Second, no one ever said it would end our dependence. But two million barrels per day are two million barrels per day.
I guess you would not bend down to pick up twenty dollars because, hey, it´s not a hundred.
Second, we will NEVER become energy independent and if you listen closely, no politician using the phrase literally means it. The cost would be so high, it´s not even a rational goal. But surely we can pick the low hanging fruit. As for oil, it´s not just used by cars. There is no fossil-fuel free car either. Even if you overcome all the problems associated with using a different way of storing energy for cars – and they are still legion – you still don´t have a fossil-fuel free car. No matter how you store the energy, it has to some somewhere, like coal or natural gas (which is a fossil fuel even if Nancy Pelosi famously didn´t know this). After all, the anti-drilling forces do not like the one efficient non-fossil energy source either, namely nuclear energy. They are more appropriately described as anti-energy.
The United States and most developed countries will be net oil importers for as long as you live. I guarantee it. The rest is propaganda to get gullible fools to support big politics (I blame both McCain and Obama for being untruthful here). Oh, and please can the hippy crap: The bailout is not needed by capitalism, it is demanded by people who don´t want to pay the price for their wrong decisions. Letting companies fail, that would be capitalism.
I am amazed with it. It is a good thing for my research. Thanks
You must be logged in to post a comment.