It tells you all you need to know.
With gasoline consumption trending down, motorists wonder why price keeps rising
Yeah, why are gas prices rising at a time of year that they are traditionally lower than normal?
Well, if you give it some thought, I believe you will come to the same conclusion I have: that this is a rhetorical question.
We know that certain large, wealthy and influential business interests have an “interest” in not seeing President Obama re-elected, or at least keeping Democratic gains at a minimum, especially in the House of Representatives, for a number of reasons, despite the fact that the profitability of these businesses has performed very nicely over the past 3 years, thank you very much. Nevertheless, these profitable business interests would prefer a Republican in the White House.
These businesses also have the ability to effect the availability of gasoline and the price that you and I must pay for it, keeping supply low so prices will continue to rise. Higher gas prices means upset consumers, many of them who are also voters. Upset voters tend to blame the President in office and his party for the state of the economy.
Shawkat Hammoudeh, an economics professor with Drexel University in Philadelphia, has another measure: Crude oil hitting $120 a barrel “means about 0.5 percent will be cut from economic growth in the first year of a budding economic recovery.” […]
Hammoudeh said the “typical American household spent $4,155, or 5.7 percent of its budget, on gasoline in 2011. If higher oil prices continue and the consumer is not able to adapt, a reduction in spending on non-discretionary goods and services will follow.
“If this scenario takes place, then the (U.S.) economy will suffer from a spending reduction that affects 70 percent of the economy,” he said.
Do you wonder why the Neocons are being trotted out to hype a war with Iran even though Iran is not an imminent threat to any country in the world, including Israel? Do you winder why US refineries had record production of gasoline in November but most of that increase went to exports despite the demand in the US market? Would you be surprised to learn that Wall Street speculators have been driving the price of crude oil up?
WASHINGTON — U.S. demand for oil and refined products — including gasoline — is down sharply from last year, so much that the United States has become a net exporter of gasoline, unable to consume all it makes.
Yet oil and gasoline prices are spiraling upward. […]
While tension over Iran has ratcheted up in the past few months, oil and gasoline prices have leapt far beyond conventional supply-and-demand variables. Financial speculators are piling into the market, torquing the Iranian fear factor into ever-higher prices.
“Speculation is now part of the DNA of oil prices. You cannot separate the two anymore. There is no demarcation,” said Fadel Gheit, a 30-year veteran of energy markets and an analyst at Oppenheimer. “I still remain convinced oil prices are inflated.”
Gee, I wonder what happened to the invisible hand of the free market? Well to be honest, I don;t really wonder about that at all. You see, we’ve seen these types of “games” before in election years. For example, wasn’t it funny how in both 2004 and 2006 oil prices declined significantly in the run-up to the November elections at a time when lower prices would presumably benefit Republican incumbents.
I guess that invisible hand prefers Republicans to Democrats for some reason. Which is why we can expect a spike in gas prices this summer and fall, just when certain “persons” of non-human origin can run ads attacking Democrats for screwing up the economy. Oh and don’t call that statement a prediction, please. Call it my trend analysis of market fundamentals. Not a free market, mind you, but the real one where you have to pay to play. Unlike the rest of us who just have to pay and suffer the consequences when large corporations and Wall Street financiers manipulate the economy to obtain political gains favorable to their interests, not ours.
Americans are now more critical of corporations than they have been at any point in my lifetime. It would not be hard for them to understand what is going on, if the topic is publicly discussed. I do not think that the President is the best person to lead this discussion, he’s too much in the line of fire and can too easily be portrayed by his enemies as self-interested. Maybe Elizabeth Warren and Richard Cordray are the appropriate people. But really, it is despicable behavior by the banks and the oil industry and would easily be recognized as such by the majority of Americans. In other words, the Democrats have to direct the resentment where it belongs.
All they need to do is hold onto the House. And they will pull out all the stops to make sure that happens.
I do not think that the President is the best person to lead this discussion, he’s too much in the line of fire and can too easily be portrayed by his enemies as self-interested.
Is the DOJ and the SEC going to finally develop a spine and crackdown on corporate America? Because that is what it’s going to take. The President’s second term and the fate of this country might just depend on it.
Another real possibility is state AGs.
An oil speculation bubble that bursts would be delightful at this point.
The way pump prices are set also affects what’s going on. The prices rise with spikes in oil prices, with me-too price rises maintaining the level against a price war. But the price does not start dropping until one of the retail gas pump players sees the opportunity to be predatory and move customers from other players. Then the me-too effect causes prices to fall enough to stabilize prices until the next crude oil spike.
The the speculative bubble bursts, it will help, not hurt the retailers even as pump prices go down.
Maybe I’m weird, but it’s almost unfathomable to me that people could spend $4,200/year on gas. I don’t ride public transit. I don’t even drive a fuel-efficient car. I drive an old Jeep Wrangler that, on a good day, gets absurdly poor mileage. And I spend about $60-70/month on gas.
My wife drives a Jeep Patriot, which is fairly respectable on gas for what it is (when I’m driving anyway — wife has a lead foot), but it’s still not exactly a Prius. She spends less than I do.
Figure $1,500-ish. And it isn’t like we don’t travel.
How the hell do you go through $4,200 worth of gasoline? Do people really live that far from work? Is the typical American driving an 18-wheeler on the weekends?
I don’t get it.
Two cars X 12,000 mpy = 24,000 miles per year. Figure 27mpg. (Some much less)
24,000 / 27mpg = 889 gallons per year.
889 X $3.50 = $ 3115.00 per year
This is about what the wife and I spent in the last year.
We are both former commuters who now work from home and drive two cars that get around 25 MPG each. At about 5K miles a year total, I’m guessing in the neighborhood of $700 for direct fuel expense. Since some of those are business, charitable and medical miles, we’ll write off part of that. The expense that’s more difficult to control is the freight on things we consume. If we buy locally produced items wherever possible, we can make a dent there as well. I know everyone doesn’t have the WFH option, but squeeze the bastards wherever you can. Screw big oil!
Before I get a job, I’ve budgeted $3,000 per year for gas. If I can help it, I plan to bike to work — or ride public transit. But just in case I cannot, I’ve budgeted $3,000. It’s very easy, dude.
Yeah, that struck me too.
I have a long commute – about 100 miles round trip per day. And I travel sometimes too, like, cross country kind of travel. I spend about $3800 / year on gas.
Granted, that’s just me…so if I had a significant other, it wouldn’t take much to go over that $4200 mark.
It kind of made me wonder if other factors were being included – such as the price of gas used to transport the goods we use and the food we eat. But that’s pretty difficult to quantify.
I don’t know. As they say, 75% of statistics are made up on the spot.
I spend what you do, and I live about 4 miles from work with no traffic. Many of my miles happen on weekends when I drive down to the twin cities for fun. My car gets about 23mpg.
So I can easily see how people would rack up multiples of that, especially as most two parent families have two cars and parents each have a job, probably a lot further from home than mine. and I doubt most people’s suvs and minivans really get better than 18-19mpg city driving.
re the point about price falling before elections:
yes, and i noticed it went up in 2000, when of course an oilman was running against an incumbent VP. it actually began to rise around mid-1999, more or less when dubya became a candidate, and continued thru summer 2001. my suspicion is someone noticed how the white house changed parties in 1976 and 1980, both times following oil crunches. 2000 may have been an experiment to see if the effect could be reproduced. whether it was done by big oil or by speculators, i can’t say. the fact that it appears to be happening again is troubling, to say the least.