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View Full Version : Gas prices plunge: Beware what you wish for


MasterOfPuppets
06-28-2012, 04:14 PM
okay , call me an idiot , but can someone explain to me how consumers spending a higher percentage of their budget on gas equates to a better economy ?
i mean in my feeble mind , i'm thinkin the more i spend at the gas station , the less i spend anywhere else ...:noidea:
so i was gonna go buy some clothes ...can't , gotta fill the car up again..
i was gonna buy a new TV ... can't , gotta save money for gas...
i was gonna go out and eat ....can't , need the money for gas to get to work.
i was going to take a vacation ....can't afford the gas and a hotel.
etc...etc...etc...
so in all the scenario's i play out in my mind , i'm making one industry rich and not helping any other parts of the economy....help me out here..


http://www.cbsnews.com/8301-505123_162-57461517/gas-prices-plunge-beware-what-you-wish-for/
(MoneyWatch) Gas prices have retreated and that's a good thing...sort of. The average for a gallon of regular gasoline is $3.38, according to AAA (http://fuelgaugereport.aaa.com/?redirectto=http://fuelgaugereport.opisnet.com/index.asp), down from a high of $3.93 in April. Sure it was terrible to pay an extra $0.55 a gallon to fill up your tank, but today's relief comes with an asterisk.
The run-up in prices at the pump was caused by a $35 rise in crude oil that occurred from $75 a barrel in October to $110 in April. The price of crude is responsible for two-thirds of the increase in gas prices.

Here's a breakdown of $1 at the pump as of May 2012, when the national average retail price of a gallon of regular gasoline was $3.73, according to the Energy Information Administration (http://www.eia.gov/energyexplained/index.cfm?page=gasoline_factors_affecting_prices):


Crude oil: 66 cents
Refining costs and profits: 13 cents
Taxes: 11 cents
Distribution, marketing and retail costs and profits: 10 cents


Gas prices are now just about where they were in October, when economists and investors worried that the European debt crisis would drag down the world economy. From October to the beginning of February, European fears simmered down; economic data improved; and Indian and Chinese demand increased for raw materials. The result was a near-20 percent bump in stocks and an increase in crude oil from $75 to $90 a barrel.
The last $20 increase to the April high occurred due to Iranian tensions, supply disruptions and of course speculators, who jumped on the bandwagon, trying to profit from the uncertainty. But then a funny thing happened: Worries about the Middle East cooled down, oil refinery glitches that crimped supplies were resolved and worst of all, global growth slowed down.
While many opined that European growth would stall due austerity measures and the ongoing debt crisis, the speed with which that contraction has spread to China, India, Latin America and the U.S. has been swifter than anticipated. When the world slows, the demand for energy drops and the result is that crude oil has retraced almost its entire move higher, trading at near $79/barrel.
But the trade-off for lower oil and gas prices is slow growth and tepid job creation. The U.S. economy expanded by only 1.9 percent in the first quarter and the past three months has only seen an average of 96,000 jobs created each month, well below the number needed to keep pact with new entrants to the workforce.
So sure, it's great to save money when we fill up our cars - economists say the drop in prices could put an extra $110 billion in consumers' wallets (http://www.usatoday.com/news/nation/story/2012-06-20/oil-gas-prices/55746372/1). But I'm guessing that most Americans would trade paying an extra quarter at the pumps for an economy that was firing on all cylinders, creating 200,000 jobs a month and prompting employers to hand out raises. You may want to reconsider wishing for lower gas prices back in April.

MACH1
06-28-2012, 04:24 PM
I think I heard that demand was down here and in china, partially because manufacturing, importing/exporting is down.
Any how it's not because of anything the government's done.

MasterOfPuppets
06-28-2012, 06:08 PM
I think I heard that demand was down here and in china, partially because manufacturing, importing/exporting is down.
Any how it's not because of anything the government's done.
i'm sure it is... but imports / exports are also based on supply and demand. if americans don't have money to spend at walmart because they just put every penny they had in the gas tank , naturally china's manufacturing and exports take a hit.
so now gas prices and the economy have turned into the chicken / egg controversy.
what i don't get is why the gas / economy connection wasn't a topic of conversation 15 , 20 ,30 years ago when fuel prices were manageable and wasn't a big issue ?
common sense dictates that high fuel prices equals higher prices on EVERYTHING . the more we spend on one thing the less we have to spend on another. how could that not effect the economy ? i'd rather spend $50 a week supporting local single mothers at the strip club but i can't now because 40 of that 50 now goes in the gas tank to get to work.. ...:doh:

Vis
06-28-2012, 06:19 PM
Demand is down because it's 100 degrees and I have black seats.

MACH1
06-28-2012, 06:20 PM
20 years ago china didn't have use over a barrel like they do now and they weren't as near developed as they are now.
Other than that I don't think there was enough foresight to see these other county's developing like they are with the demand for oil.

MACH1
06-28-2012, 06:22 PM
Demand is down because it's 100 degrees and I have black seats.

Thats what the a/c is for. It only burns for a second. :chuckle:

MasterOfPuppets
06-28-2012, 06:26 PM
Thats what the a/c is for. It only burns for a second. :chuckle:
kinda like syphilis...

MasterOfPuppets
06-28-2012, 06:29 PM
20 years ago china didn't have use over a barrel like they do now and they weren't as near developed as they are now.
Other than that I don't think there was enough foresight to see these other county's developing like they are with the demand for oil.
sure. they've grown because of western consumption of their manufactured products. now that the economies of the west are in the crapper , their economy will follow because nobody is buying their junk. chicken / egg. (US consumer = chicken...china's manufacturing = egg ) take the chicken away , there is no new eggs
they took our jobs , but they also took our pay checks.

MasterOfPuppets
06-29-2012, 06:43 PM
YAY ..the speculators saved us from the threat of low gas prices ...:applaudit:

everybody remember to thank god for wall street in your prayers tonight...

Oil Prices Spike 9%

http://online.wsj.com/article/SB10001424052702303649504577496510129394628.html?m od=googlenews_wsj