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Page added on February 23, 2012

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Energy-Price Immunity Building in U.S. Economy

The U.S. economy is “gradually building immunity” from the kind of surge in gasoline prices seen this year, according to Steven Wieting, Citigroup Inc.’s managing director of economic and market analysis.

As the CHART OF THE DAY shows, spending on gasoline and other motor fuels fell 10 percent from a peak in 2005 through the end of last year. The drop is based on a 12-month moving average of data compiled by the Commerce Department.

The chart also displays the average monthly retail price nationwide for gasoline, as compiled by the Labor Department. The pump price climbed 7.5 percent this year through Feb. 21, according to data from the American Automobile Association.

Crude oil rose 7.3 percent for the year through yesterday in New York futures trading, and gasoline advanced 15 percent. Consumers will have to spend another $25 billion to fuel their cars and trucks this year if higher prices stick, Wieting wrote two days ago in a report. When the year started, he was looking for a decline of $15 billion.

Increased capital spending on energy-related products will lessen the economic effect of the reversal, the New York-based economist wrote. Industry outlays rose $34 billion last year and may climb even more this year, the report said.

“This combination suggests only very modest changes to the U.S. growth and inflation outlook” from the energy-price swings, Wieting wrote. He added that crude and the Standard & Poor’s 500 Index track each other closely enough to indicate higher oil prices may add to stock investors’ wealth.

Bloomberg



5 Comments on "Energy-Price Immunity Building in U.S. Economy"

  1. Kenz300 on Fri, 24th Feb 2012 1:41 am 

    It is time to end the oil monopoly on transportation fuels. Bring on the electric, flex-fuel, hybrid, CNG, LNG and hydrogen fueled vehicles. The oil industry has the world backed into a corner.

  2. MrEnergyCzar on Fri, 24th Feb 2012 1:45 am 

    High gas will cause another recession this year…. they should know better the effects will be felt in a few months..

    MrEnergyCzar

  3. BillT on Fri, 24th Feb 2012 3:02 am 

    Who listens to anything from Citi? Fools and stockholders. (the same?) A spike in the price of oil will push the US farther into the depression it is already in. Of what value will a DOW of 30,000 be if $30,000,00 will not pay the car payment? No mention of the dollar turning into Charmin, thanks to Citi and their companions in crime.

  4. DC on Fri, 24th Feb 2012 3:45 am 

    Price immunity! Is that like saying people that cant afford to eat anymore are building a ‘hunger immunity?’

    LOL!

  5. Kenz300 on Sat, 25th Feb 2012 4:41 am 

    Those 40+ MPG vehicles that all the auto makers are coming out with are starting to look better. Every auto maker is coming out with an electric vehicle. As the price of oil continues to rise we will all appreciate energy efficiency a little more.

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