Market Currents
Consumers may enjoy the extra $10 or $20 in their pockets thanks to falling gasoline prices, but...
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Saturday, June 23, 2012, 8:45 AM ETConsumers may enjoy the extra $10 or $20 in their pockets thanks to falling gasoline prices, but the slide in crude oil and other commodities is nothing to celebrate. It's a reaction to slowing economies, which makes for an odd leap of logic when one tries to argue that falling commodity prices will help boost those same economies. Does saving a few bucks at the gas pump really make you any richer?
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I only have one question,
is this "Bush's Fault" also?
The reversal of a pipeline from Cushing to the Gulf, and increased US production, are providing some relief from this effect.
As such, the US economy may prove more resilient than the global economy
I think you best head back to Econ 101...
If you hate gas that much you can always buy an Everest EV for less than $20k and get tax breaks for it.
mynewev.com
Although, it appears they're only available to fleet purchasers right now?
3.78 reg gasoline in November) on 3/13/12... yesterday this futures closed at 2.21
(3.01 reg gasoline for November). Recessions generally start ( with other factors)if crude oil
y-o-y goes over 40% FIRST.....we are negative y-o-y....Negative
y-o-y oil prices generally lead to an improved economy later on....
Fact is just as the 'inflation' calls people made when oil was on its way up were wrong the 'deflation' calls people are making with oil on its way down are wrong too.
The energy market is getting a bit more rational as 2008's spike starts getting removed from models...
Take an average American bringing home $1,000 per week after taxes. Lets say gas is now $3 per gallon and this average harding working middle class American who wakes up everyday and commutes to work to put food on the table and provide healthcare for this family (lol) must fill his or her 15 gallon gas tank twice per week. I figured this description was appropriate since we are in an election year.
Lets do the math:
52 weeks * 2 fill-ups per week * 15 gallons * $3 per gallon = $4,680 per year or 9% of annual income (4680/(1000 per week * 52 weeks).
Now lets say gas declines to $2.50 per gallon. Lets do the math again:
52 weeks * 2 fill-ups per week * 15 gallons * $2.50 per gallon = $3,900 or 7.5% of annual income (3900/(1000 per week * 52 weeks).
Savings of $780 annualy (4680-3900).
So now this person can buy an iPad with 3G and accessories!
Think that is stimulative to the economy if millions more Americans can now afford an iPad?
Gee I wonder if the answer is yes! Lol.
Many businesses are able to switch from oil to gas, reducing costs. Various chemicals industries use natural gas as a feedstock, and the US now has a cost advantage on that basis.
Over time natural gas will make its way into transportation uses, providing additional breathing room for oil prices.
Natual gas, when used to generate electricity, is fairly flexible. That improves the ability to alternate between wind or solar and fossil fuels, again reducing reliance on oil for power generation.
If the current definition of global economic growth is that the cost of living rides the exponential growth curve of dollar decay while income is stagnant and employment declines, we need to change our vocabulary to reflect common usage.
The Wall Street Journal can blame the slide in oil prices as a symptom of "a weakening economy" if they want.
My take is they are right, but the previous spike in oil prices helped to cause the now weakened economy.
Freddy Hunter at Trendlines predicts crude bottoming @ $63 by September. I'll take what I can get, thank you.
As GDP growth picks up, oil prices rise pushing back and down on GDP growth. This has been true for a number of years and oil prices/demand are leading indicators of economic activity/expectations.
Natural Gas is a different story. The fracking revolution has opened up vast new quantities of the stuff (outpacing demand) providing cheaper energy.
If you want to argue against lower gas prices then you've got a screw loose.
If you were dumb enough to invest in energy and hang on to it once it topped out, that's your problem.
Seriously, you could check the math.
Insult
Insult
Insensitivity
Grow up.
Consider the huge debate there was regarding the payroll tax reduction, probably 50% of the population payroll tax cut was less than what they save on gas during the recent decline.
The answer is yes, gas prices falling is a big deal. Fuel is the #1 input of any economy, especially the US economy. A fall in prices there is beneficial to the US consumer, but these benefits take time to show.
However, it is also true that the magnitude and velocity of the fall in fuel prices indicate a slowing global economy. India and China power most everything from crude-based products, so for Brent crude to fall from $130 to below $90 indicates a large drop-off in demand. Still, this move is massively overblown in the near-term, as OPEC and the Saudis cannot afford for crude to be below $90/barrel to fund their social programs promised as part of the Arab Spring. Brent at $90 is a definite buy, looking for a retraced move above $100.
A slowing global economy or an increase in supply? If the frackers in the Bakken keep finding more oil, what happens to your analysis? Can your finances withstand a delay in that retrace move?
The spread between Brent and WTI has been large and is finally narrowing as the transport sector moves to take advantage of that. Fracking for natgas has led to historically low prices which in turn are driving substitution of natgas for oil in a number of applications. Meanwhile fracking is being used for oil now and the resulting increase in supply has been driving down prices for WTI.
To twist a phrase, it's not just the economy, stupid.
Compare this to the amount we pay annually on health care. $10,000 for full coverage with a $2000 deductible. $12000 total - this is by far one of our biggest annual expenses.
If business and government really want to get together to help middle class American families, healthcare would be a good place to start.
The obsession with gas prices is of the "penny wise pound foolish" variety. I rather have a 5% reduction in my healthcare premium than a 5% reduction in the gas price.
Time to start regulating the health care industry and place caps on the premiums. The greed displayed by insurers and the medical industry is nauseating.
No one can afford to pay cash at the going rates, so health care costs would drop like a stone.
The gigantic health care/health insurance/government tax sucking ponzi scheme would collapse like Lehman Brothers.
If I can pay for their insurance, but I can't have that for myself, then f*ck 'em.
Sounds like 'the greed' is displayed by you.
So, set up a program for expensive, catastrophic illnesses?
Like... uh... oh... I dunno, how about something like insurance?
Good point. It's a broad-based inflation driver.
God forbid doctors and hospitals have to compete with each other.
The purpose for insuance is to help with catastrophic care, something happens that you cannot forsee. Now its used for every ity bity thing like lancing blisters and check ups. If you limit insurance to surgery and catastropic care, and pay cash for the rest, you can balance out costs by introducing some competition.
The point is it would only pay for expensive, catastrophic illnesses, not everything.
A focus on a healthy lifestyle with direct payment for services and insurance on catastrophic events would drop costs by a huge percentage. Insurance premiums could be somewhat tied to dangerous practices (smoking, mountain climbing etc.) to encourage people to mitigate risk.
Effectively, the HSA system transfers the payment obligation for the non-catostrophic services onto the consumer, who pays cash. This is what you described. Unfortunately, it hasn't really dented and won't dent the $66 trillion unfunded obligations of our three largest (and public) healthcare systems.
Im not suggesting its perfect. Nor am I suggesting its widely available. Im in Minneapolis, where HSA plans are the norm, but I don't know whats available elsewhere. Im simply pointing out that the system you described exists.
A quote from the Joker in The Dark Knight, turned in to an internet fad/meme. Usually used on angry, emotional people who tend to go overboard or not understand jokes.
Whether the ACA is the best implementation of the basic solution is open to discussion. It's America, you have a political process, special interest groups with their hands out and their wallets open, fraud ongoing, so on and so forth.
At a basic level life style choices contribute heavily to the expense of chronic illnesses. I personally have made the various changes required to make it to retirement without incurring medical costs of this kind, meanwhile paying, or my employer paying which ultimately comes from the same source, for those who can't or won't exert moderation and take proper exercise and nutrition.
I've reached the point, whatever happens is not going to be fair at some level, the best way to deal with it take care of your own health and enjoy life.
Mandatory coverage for foodcare.
Check.
48 million americans now on foodstamps. Almost three quarters of a trillion dollars now in transfer payments.
Mandatory coverage for housing.
Check.
Not just Sec 8 housing. Our last(and current) crisis was due to mandatory home ownership via lowering the standards on credit to all.
Mandatory air care.
Almost. Not yet, but almost. Cap-n-trade.
Mandatory bank care.
Check.
Frank-Dodd is here until the SCOTUS knocks it down after Shyster Care gets powned next week.
Mandatory pensions.
Check.
Look at GM. It was a bailout of VEBA for the UAW.
I guess the government really can do all things under sun, from the cradle to the grave.
Welcome to the Matrix.
Same thing applies to income tax.
If it was moderated it would be half as long. Comparisons are one thing, but take the health care posts to a more appropriate thread. This thread has a terrible case of ADD. Keep SA threads on topic.
That would take all the fun out of the debating club. Somebody uses the "O" word, and we're off to the races, you can while away a couple of hours, between innings on the baseball game, or mowing your lawn, it fills out the day.
Whereas some of the SA crowd here views the average Joe getting an additional 20 bucks/week as inconsequential.
Savings of 20 dollars a week for the average family is as much benefit as the payroll tax cut
I can. I frequently buy enough for several meals (avocados, tortillas, and frozen veggies) at Trader Joes for about $10.
All the worldwide trends are intact and the cheaper gas won't offset all the other increases. I don't see a way to stop the 2013 slowdown. Whether it becomes an "official recession" in the US or not !
The whole US ball of wax relies on the housing market and it is weak. Yes #s are ticking up,but, there way off pre Lehman #s..
Normally in times like these the US somehow bails the economic engine with a war that appears out of nowhere,but, we've been there an done that too often ! Lately and it didn't work even with trillions spent on US companies. No ?
Now the billionaires tripled and 150,000,000 people sank under the poverty table.
We should all be eating cake ! Drop the reserve and let Ben print much, much ,more. We're all Greek ! DL
This time, crude oil leads the decline.
It's a huge difference.