This deserves a longer post, and maybe I will come back to edit it.
I've been waiting for the linked article for quite some time now, and finally AP has come through:
price of oil is starting to hurt the economy.
How long has it been since we last saw $85 oil?
But I digress.
The linked article says this:
Oil has topped $108 a barrel, the highest price since 2008. Regular unleaded gasoline now goes for an average $3.69 a gallon, according to AAA's daily fuel gauge survey, up 86 cents from a year ago.
Eighty-six cents from a year ago.
How many miles do you tell your insurance company you drive every year. Yup, 12,000 miles or 1,000 miles/month.
[If you are driving a car that gets less than 20 miles per gallon, this post does not apply to you. But then again, there's been plenty of time since 2008 to find a vehicle that gets 20 mpg. By the way, President Obama thinks it is
something to laugh about if folks are still driving vehicles that get 8 mpg.
“If you’re complaining about the price of gas and you’re only getting 8 miles a gallon, you know,” Obama said laughingly. “You might want to think about a trade-in.” Let them eat cake.
As I've said so many times before, I can't make this stuff up.]
If you drive 1,000 miles/month (like you tell your insurance agent) and you get 20 mpg, that works out to 50 gallons of gasoline/month.
According to AAA, gasoline is up 86 cents/gallon. For fifty gallons, that's $43 extra per month in gasoline costs compared to 2008.
That's one meal out for two people at a moderately upscale restaurant. It's one meal for a family of four at McDonald's -- not quite, but close. Throw in a couple of Starbucks coffee that week, and you will hit $43 (the McDonald's family of four dinner plus a couple of Starbucks.
Now, tell me again, that 86 cents more per gallon is hurting the economy.
I've got a much longer post on just this subject, and I think my argument is pretty solid. But politicians will demagogue it and airlines, grocery stores, and taxis will take advantage of it.
Again, I am not alone on this. President Obama, in his energy security speech just a week ago (when oil was $104 or thereabouts) reassured us that a $10 increase in the price of oil/barrel translates to only 25 cents/gallon at the pump. He understands the demagoguery and reassured us that cutting imports by one-third by 2021 will solve our problems.
This is what's scary, folks. If there's the amount of inflation in the next six months that Wal-Mart is predicting, then we will have something to be concerned about. The good news: The Chairman of the Federal Reserve, Mr Bernanke says "he" can stop it (inflation).
