Gasoline prices, not again?
As if the US consumer didn’t have enough to worry about, following the DOE data, the front gasoline contract is rallying to the highest level since Oct 15th ‘08. This morning, AAA said the national average for unleaded gasoline rose to $2.63, the most since Oct 28th ‘08, up from the recent low of $1.62 at the end of Dec. To quantify, the US uses about 9mm barrels of gasoline per day with 42 gallons in each barrel, thus 378mm gallons per day and almost 140b per year. Therefore, for every $1 move in the price of gasoline, it’s an extra $140b more in consumer spending at the pump. If gasoline prices stay elevated, it will dramatically dilute the tax cut portion of the Obama stimulus plan. On Feb 17th, Pres Obama signed the $787b stimulus plan that included $237b of ‘tax relief’ for individuals, $116b of which was a temporary payroll tax credit for income earners under a certain level.
June 10th, 2009 at 11:56 am
I guess there’s no more crisis anymore, huh? no more recession? all
done. Problem fixed by minting a trillion dollars out of thin air. Happy days are here again.
yay i love jobless recoveries. I love outsourcing. i love hyperinflation. I love huge
deficits. I love fear mongering pandering politicians, I love $4 gas and 140 oil. I love
making petro dictators rich
good articles for a slow news day: http://budurl.com/wet8
Wealth polarization, labor trends, trade imbalances, size of FIRE economy vs. productive economy, consumption vs. investment. I’m less interested in proving it mathematically as I am about coming up with an explanation that makes intuitive sense. If you look at historical depressions, they’ve all centered around a huge malinvestment. Tulips, South Seas bubble, 1870’s railroads, farm production/investment, etc.. And each has had a speculative buildup focused on this unproductive excess.
June 10th, 2009 at 12:27 pm
Did someone really think that the “leash of petroleum dependence” had been taken from around our necks because of a temporary decrease in prices? It will always be there, will hit us at the most undesirable times and there isn’t much we can do about it except find ways of using less and developing alternatives. All I can do is go “yuk, yuk, yuk!” at the dunderheads who went out and bought the big monster SUV’s this last time the gasoline prices dropped. GOTCHA!!! Go back to your couch and french fries and get your exercise working the remote.
June 10th, 2009 at 12:54 pm
And did you think that possible govt. intervention is going on to further the Pres. green intiatives? And I like both my SUV’s irregardless of price. No Fiat for me.
June 10th, 2009 at 12:56 pm
deanscamaro – hey, at least the lucky “dunderheads” who bought a diesel behemoth can use their used french fry oil to power their car… for two miles. I guess people will never learn. Haven’t bought gas in a month and the weekend car still has 3/4 of a tank. Was surprised the other day when my GF told me it went up so much. It’s nice being able to make my 7-mile-each-way commute on about $10 worth of electricity a month. Meanwhile GM releases the V-8 Camero instead of the Volt. ‘Nuf said…
June 10th, 2009 at 1:30 pm
The commodity spike is largely speculation – again. The cure for high prices is high prices. I expect we will see a decrease in demand before long and any modest rally in the $ will also curtail the price spike in commodities.
June 10th, 2009 at 2:25 pm
@LB
Deva vu all over again. The whole thing is ridiculous. I hear drill, drill drill again.
June 10th, 2009 at 2:50 pm
It will take years and generations, but the petroleum industry/speculators will finally wean us off this dependency. The rest of the world has found you don’t need something the size of a bowling alley inside to drive around. We’re just spoiled.
June 10th, 2009 at 6:12 pm
“I hear drill, drill drill again.”
LOL. Is there an echo in here or is it Larry Kudlow saying the same moronic things as last year?
June 10th, 2009 at 6:31 pm
[...] Comments There is absolutely no demand increase, no supply chain disruptions and no OPEC cut back. Take your guess on why gas prices are rising: This morning, AAA said the national average for unleaded gasoline rose to $2.63, the most since [...]
June 11th, 2009 at 1:45 am
But the states love the taxes from it, no?
June 11th, 2009 at 12:05 pm
Having said that, unless we rethink the way we use our wealth, this world is doomed. al-Waleed bin Talal, however he came by his wealth is in a position to make a difference. Instead he chooses conspicuous self-consumption.
next shoe to drop real soon…hyperinflation..market tanking..sell now
one of my new favorite finance websites… http://bacn.me/7gy
Having said that, unless we rethink the way we use our wealth, this world is doomed. al-Waleed bin Talal, however he came by his wealth is in a position to make a difference. Instead he chooses conspicuous self-consumption.
June 12th, 2009 at 6:23 am
[...] per day with 42 gallons in each barrel, thus 378mm gallons per day and almost 140b per year. Ritholtz.com Altro che stimolo fiscale a sostegno dei consumi, servirà a sostenere l’aumento dei [...]
June 12th, 2009 at 12:02 pm
[...] interesting piece of analysis via TBP about rising gas prices crowding out retail and industrial consumption. The premise is sound but [...]