Posted on 03/06/2015 7:02:17 AM PST by thackney
The plunge in gasoline prices has generated a windfall for American drivers. But so far, there's little evidence those savings are producing a widely anticipated boost in consumer spending.
So where is all that money going?...
Even though prices didn't fall until late last year, Americans saved some $14 billion on gasoline last year, or an average $115 per driver, according to estimates from AAA. The group figures if pump prices stay tame, those savings could amount to as much as $75 billion this year.
That kind of savingif consumers spend it elsewherecould provide a powerful boost to the U.S. economy, much like a tax cut. But, so far, that spending boost isn't showing up in the data.
The latest read from the Commerce Department showed that retail sales in January barely budged after dropping in December. Those figures are echoed in separate government data on overall spending. While outlays on energy-related goods and services plunged in December and January, total personal spending on goods and services also weakened....
Even if gasoline prices stabilize at lower levels, and consumers begin spending the difference, the impact may be less than initial forecasts suggest.
For starters, while a typical consumer might save between $500 and $800 this year, those savings don't come in a lump sum right away, notes Wells Fargo senior economist Mark Vitner.
"On a weekly basis, the savings work out to between $10 and $15, which is meaningful for lower- and middle-income households, but not enough to finance a spending spree, particularly right off the bat," he said....
(Excerpt) Read more at cnbc.com ...
I would say a majority of Americans are doing that. Which is why there hasn't a big boost in consumer spending.
Obama had no problem in winning in 2012 with $4 gas and the Dems had no problem losing bigtime in 2014.
Don’t really understand your post.
Correction
Which is why there hasn't Been a big boost in consumer spending.
The idea that consumption produces prosperity is absolute lunacy. Complete idiots. Try saving and investing.
The late winter rise did not occur unexpectedly here in gulf-coast Florida. As prices were free falling, energy “experts” interviewed on the radio said the prices would rebound in February and continue to a peak price sometime in May. I believe under $3 per gallon gas prices as a doable thing in 2015. Of course I would like it to be under $2, but I’ll take $2.70 per gallon over the long run.
I’d just like airfare prices to ease seeing as how fuel contracts could have been locked in when fuel prices were approaching the bottom. I can report that airfare seems to have gone up over the past 3 months, not down, as I’ve been watching diligently with a summer trip coming.
Oh, I don't know...but have you seen the price of hamburger meat, lately?
Paid an electric bill?
Bought fuel oil for your home heat system?
Sure as hell ain't buying big screens in this household.
You didn’t read the rest of what I wrote on that post.
“They are to the point where they dont have any place else to store it. Prices will fall shortly thereafter.”
Let me clarify.
Demand has stayed flat around the world for oil. In order to for prices to go up as it has been oil has been been stored in every nook and cranny the oil producers can find.
This has caused a temporary increase in the price of oil as well as gasoline at the pump.
As soon as soon as they run out of storage capacity, while the oil wells are being pumped at the current rate, prices will drop because demand is not going to increase toward the summer like they hope it will.
As a result you will see the price of gasoline drop over the next few months.
The U.S. Is Pumping Even More Oil and Storage Tanks Are Getting Filled to the Brim
http://www.bloomberg.com/news/articles/2015-03-04/the-u-s-is-pumping-even-more-oil-and-storage-tanks-are-getting-filled-to-the-brim
"Rockets and feathers". Goes up like a rocket, comes down like a feather.
Whatever saving we might have had at the gas pump got used up at the supermarket. Thanks in large part to the ethanol boondoggle pushing up corn prices, beef chicken and milk are soaring in price. I find it now cheaper to buy wild caught salmon and tuna than hamburger.
price relief on any necessity is a pipe dream. Sure, maybe short term (very short), but increases in everything you need are the norm except for middle income salaries.
Now there have been and will continue to be price drops in thing you don’t need but are cool. Like consumer electronics. And appliances seem to always get a little cheaper.
I did, but I wrote my response really badly. I wanted to take exception to the claim "The oil cartel has been storing oil in order to jack up the price since demand is down around the world."
Demand has stayed flat around the world for oil.
Not true, demand for oil has grown since prices started dropping, just a bit slower than before.
The price drop is due to supply growing faster.
As soon as soon as they run out of storage capacity,
The situation is going to begin to change sooner than that point. What has been happing, the future traded price several months out is higher than the storage fees for that duration. As storage gets tighter, that cost differential is going down.
My understanding is much of the oil storage increase over the last several months was not due to folks gambling on a higher price later, but buying physical oil at today's price while selling a futures contract for delivery several months out and locking in their profit. That situation is not going to last longer.
Also note that storage issue is more a US event, while global stocks are rising, but not to the extent US stocks are rising. And that can be seen as the WTI price versus the Brent grows to a greater spread.
The tax isn’t $1.29, motor fuel is included now in “Carbon Credits” needing to be purchased so it floats, and it’s probably more like $.20-.30/gallon. The other portion of the increase here is mainly due to CARBs summer formulations and the ability to jack the price via the excuse of the Exxon fire a couple weeks back.
It’s up about $1.00 here in the east bay area.
Don’t forget also that in CA the dog excrement sucking douchebags in the legislature get sales tax on top of their fixed tax in the price of gasoline so $4+ dollar gasoline will always have them peeing their pants for the windfall which helps mask their inability to refrain from blowing our money on worthless crap like taking care of non citizens and 200+ mph trains that will be under construction for 75 years and go 90 mph tops...
Those of the elite political class didn’t act fast enough to enact more taxes.
I would agree with you on that. Another point is, do they understand what “tapped out” really means? Fourteen dollars a week is not going to cure much for an already zero budget!
Combine that with their special recipe requirements that complicate bringing in gasoline from other locations and you get price spike over the last month.
There was a Democrat super majority that passed a $1 plus a gallon additional tax that can be implemented when they think the time was right. Not about tax credits, it was a Dem super majority using their numbers to tax EVERYONE including the poor.
Gouging = $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Not true. They passed a carbon tax that some claimed would be larger than turned out to be true.
If people take the savings on gas and actually save them, by putting them in the bank or buying stocks and bonds, those savings still end up in the economy. Banks lend them out. Stocks and bonds pay for business startups and expansion, capital equipment, etc. All that money eventually ends up in the pockets of working people.
Even if someone uses their savings to buy a pile of gold, the money eventually goes to pay a gold miner.
Economists argue that investment should not be counted as part of GDP because that double-counts the invested money that is spent after it becomes wages. Technically, they're correct. However, that allows people to forget that investment puts money into circulation, just as does consumption.
Paying down debt, putting money in the bank, or any other form of investing, boosts the economy just as much as does consumption. Moreover, without investment, there will be no jobs.
From FoxNews in August...
“Estimates of the cost of the tax vary. The California Air Resources Board, the Golden State’s premier anti-pollution agency, predicts the new tax will raise gasoline prices from 20 cents to $1.30 per gallon. A prominent state senator who helped author the bill estimated the cost at 40 cents a gallon. Environmental activists downplay the cost, but hail the impact.
“We’re going to now tackle probably 40 percent of greenhouse gas emissions in the state that are emitted mostly through transportation - oil and gas use,” said Climate Resolve Executive Director Jonathan Parfrey.”
It’s the “carbon tax”, designed to sell “credits” to “polluters”.
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