i truly believe that is part of the problem, but, $150 a barrel is not due to dollar devaluation, and consumption will go down... at what point do they not sell enough product to start losing money???
Posted on 02/21/2012 5:40:44 PM PST by blam
Can Americans Handle $150 Oil?
February 21, 2012
Douglas A. McIntyre
The International Energy Agency said Europe could “cope” with a supply shortage brought on by a drop in imports of crude from Iran, but that prices might temporarily reach near the $147 a barrel peak of 2008. The chief of large energy firm Vitol told the Financial Times that crude could reach and stay at $150. It is not entirely possible to determine what oil at $140 or $150 would do to the average American household budget, but a look at Census data suggests that the effects would be harsh.
The Consumer Expenditure Survey done in 2010 showed that the average consumer unit spent $49,067 in 2009. That unit:
includes families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share expenses.
The budget for these households was very tight. More than $10,000 went to shelter. Another $6,400 went to food. Over $3,100 went to health care. Another $5,500 went to pensions and Social Security. More than $2,700 went to vehicle purchases.
The Census data showed that in 2009, a consumer unit spent more than $3,600 on utilities, which included heating. Another $2,700 was spent on gas and motor oil.
Crude prices averaged approximately $90 a barrel last year, and in late summer they were below $80. Oil prices at $120 would be a 50% rise from the amount around Labor Day. At $150, the figure is nearly double.
What Americans spend on gas, oil and home heating oil varies widely from place to place and family to family. Urban dwellers may not own cars. Commuters in some places have 50 mile round trips to and from work. People who live in cities are more likely to weather high gas prices than others. But for those others, gas prices at or above $4 a gallon could be catastrophic. For people who drive a car that gets 25 miles per gallon, the cost of a medium length commute could increase by several hundred or even more than $1,000 this year. The government data on consumer spending shows that amount would be a burden, and other items these households buy might not be affordable at all. The Census data shows that entertainment expenditures are $2,700 a year. Apparel is just over $1,700. And food consumed outside the home was just over $2,600. Each of these activities is essential to consumer spending activity, which remains about two-thirds of gross domestic product.
Economists remain worried about what high fuel prices will do to GDP. It is really not that hard to tell. The typical American household budget is not terribly elastic, and consumer spending is about the only area where it has flexibility if energy prices jump.
i truly believe that is part of the problem, but, $150 a barrel is not due to dollar devaluation, and consumption will go down... at what point do they not sell enough product to start losing money???
My point exactly.
As a capitalist I want to pay whatever price supply and demand dictate. I wouldn’t mind eliminating *all* gas taxes, however.
We could handle it. It would not be fun.
The takers would bitch more than the makers they live off of.
I too have business interests that serve other businesses -we serve businesses who serve the consumer. The gas price is incredibly important in everything we do and in everything the consumer does or does not do, making it incredibly important to our direct customer businesses.
Five will kill the economy. I think the tipping point is really 3 to 3.50. I know conventional wisdom is that it is four. My point is, folks start to change their lives at 3 or 3.50 and by the time folks realize we are in heep big trouble, the price is usually 4.
I don’t think 5 could last because it is somewhat self correcting. Above 4, the demand would dry up and keep it from getting to 5 IMO. But anything above 3 is awful especially when we have the resources for it to be under 2.
And food too. Yum.
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Oh no you don’t! Mylife gets the food thing started and I think it is plus five lbs from just reading the posts! ha! :)
I don’t think I would mind ditching Direct TV but the mister would be a crank-butt without his Nascar. A cranky mister is yuck.
And why would you want to, it stinks and would make your hands all black and yucky.
I live in a Chicago suburb and the nearest place where I could fill a Honda Civic GX (the CNG model) is almost 25 miles away.
http://www.economist.com/node/10252015
>i truly believe that is part of the problem, but, $150 a barrel is not due to dollar devaluation, and consumption will go down...
>at what point do they not sell enough product to start losing money???
Well, the rest of the “world market”* is picking up, so the answer may simply be “we’ll sell it to someone else” and they won’t lose money.
(*I’m thinking Brazil, India, China in particular — Those countries are pulling their ‘lower classes’ up by providing more just [better] laws to those who would work for money.)
Bingo! That's the root of it.
I live in an outer suburb verging upon rural, in a midsized southern metro area that is historically manufacturing-oriented. We lagged the rest of the state, which was booming by comparison, before the 2008 crash.
There are people here, now, riding scooters to work over long distances, rain or shine. I pass a good ten of them every morning during my own fairly lengthy commute.
I live in a fairly solidly middle class neighborhood, decent but not grand houses, all with over an acre, some with five or more acres. Very little turnover here, houses just seldom come up for sale, people like it here. There are two foreclosures, no for sale signs. Three of my neighbors have lost their jobs, one is going on a year and she is no slacker, she’s followed up quickly on every lead or possibly helpful contact I’ve given her, but nothing.
It won’t take much, in some places. Desperation isn’t far away for many, and I’m surprised that I’m in close proximity to it. There but for the grace of God go I, has a new level of meaning.
It’s sad and it’s draining to witness, such a slow grind down. Many people aren’t taking pride in their houses and lawns anymore, possibly because they don’t have the money to take care of things, like they once did not so long ago.
I’ve taken to equating the years into this undeclared depression with the same stage in the Great Depression, to look at the big news, the major problems that cropped up. 1933 was a bad year for many things. Four years in.
Guess where we are? Yep. I work hard to keep myself motivated, keep reminding myself that some of the largest, most successful American companies in existence began during the depression.
I’m taking up my free time creating a startup e-commerce business. Extra income if it takes off, fallback income if the job I have ends, minimal expense.
That’s my hobby now, lol.
If we drill our own ample oil supplies and cut a deal for Canadian oil delivered cheaply through the XL pipeline there is no reason for us to be paying OPEC inflated prices for imported oil. We also need new refineries closer to Canadian and North Dakota oil fields. US oil produced by US companies in the US and sold in the US market is NOT subject to inflated OPEC prices.
Indeed, and hopefully the GOP candidate will have half a brain to make it a central campaign theme.
Amen!
The individuals who caused this do not have the intelligence to realize that it was their actions that caused it. Their last conscionous thought will be,"Thi is all Bush's fault."
Normally, in an election year, oil prices tank. It's all part of the political Kabuke, and has had some really rough consequences for those of us in the upstream end of the industry. The layoffs, consumed savings, etc. that much of America is experiencing these last four years are not strange turf to us, we've been there, done that.
Of course, discretionary spending goes first, the budget gets pared down to essentials, and the leftovers allocated to priorities first. Just a few years ago, we stripped things down to bare metal, budget wise, and cut that by half, monthly. When making such decisions, every ongoing expense was annualized; a $20/month bill became $240, for instance.
Entertainment budgets, dining out, clothing (except for growing kids and replacements due to wear), even 'unnecessary' trips by vehicle were all slashed, and bargain hunting became even more of a vocation.
Much of America will respond the same way, if they haven't already.
But the key factor in all this remains.
We cannot let the media, nor the government spin the situation into one of alleged "corporate greed" being the cause, rather the blame must be laid at the feet of those who have created the crisis.
I can only forsee the administration using high oil prices, a 'crisis' situation they have helped create by domestic anti-drilling policy, by interdicting the Keystone pipeline, by helping destabilize North African nations who produce oil for Europe (placing increased demand on world supplies), and by helping Iran get too big for its britches (also changing global demand).
While Soros' investments will likely profit handsomely from these policies, the real prize for the Marxists is the justification of their plan to 'nationalize' oil production in the US.
That will be the likely outcome they are working for, and the promised alleviation of hardship on the rank and file will be the carrot that will get their donkey cart back into power in 2012--if we let them.
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