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Page added on April 15, 2017

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Gas at $3 per gallon could hurt US economy

Consumption

The U.S. national average price for a gallon of gasoline would need to move close to $3 before it starts having a negative economic impact, an analyst said.

U.S. retail gasoline prices have been on a steady increase for the better part of the year. Motor club AAA reports a national average price for a gallon of regular unleaded at $2.40 early Thursday, an increase of 15 percent, or 32 cents per gallon higher than this date last year. Over the course of a year, that difference could eat into savings or discretionary spending.

Gasoline prices are tied to crude oil prices and the health of the nation’s refinery infrastructure. Crude oil prices are up almost $5 per gallon from one month ago and gasoline prices have moved up 4.5 percent, or 10 cents per gallon, since the middle of March.

Crude oil prices are increasing in response to a decision from the Organization of Petroleum Exporting Countries to cap production levels in order to erase a glut of oil on the market and because of geopolitical tensions sparked by U.S. military action in Syria.

The price for Brent crude oil, the global benchmark, was trading around $55.75 per barrel early Thursday, though Patrick DeHaan, a senior petroleum analyst with GasBuddy, said oil would have to move considerably higher before it starts having a direct impact on consumers in the way of high gas prices.

According to him, consumers in some parts of the country, like California, home to about 10 percent of total U.S. gasoline consumption, and big cities like Chicago and New York, are used to high gas prices and would likely have a muted reaction to gas above $3 per gallon. Other parts of the country where public transportation options are limited and gas prices are typically low will likely flinch.

“Once we’d see areas where gasoline prices are traditionally low — South Carolina, Texas, Oklahoma — then we’d likely see a hit to more of the middle class — and in these areas where mass transit is more challenging, unlike other areas,” DeHaan told UPI. “Then we’d see a more sizeable impact to consumer sentiment, and surely some slowdown in discretionary spending.”

By his estimates, the price of oil would have to reach $75 per barrel and the national average would be close to $3 per gallon before there’s a direct impact on the economy.

The U.S. government estimates Brent crude oil prices will average $54 per barrel for the year. The national average price for gas, meanwhile, is expected to peak at $2.46 per gallon during the summer and post a full-year average of $2.39 per gallon.

If government estimates are accurate, the average U.S. household would be spending about $200 more on gasoline than last year.

upi.com



13 Comments on "Gas at $3 per gallon could hurt US economy"

  1. Davy on Sat, 15th Apr 2017 6:48 am 

    Daa, what US economy? There are many and there are many regions that behave differently. This is typical stupid msm economic news. Same old boring “gas price high “bad”, “gas price low “good”. Kind of like stupid msm peak oil discussions. We have way too many intellectually weak journalism going on these days.

  2. rockman on Sat, 15th Apr 2017 9:36 am 

    Davy – You beat me to the obvious point: the US refining industry is a significant portion of the economy. As is the fossil fuel producing industry which has taken a big hit in the last couple of years…but is still generating more revenue then ever before in history prior to 2007.

    And it’s good to remember that while higher refinery product costs have a negative impact on the rest of the US economy there’s one aspect that aids the entire country: refinery exports and the trade balance. The US is the largest exporter of oil refinery products in the world shipping commodities made from 1.8 BILLION BBLS of oil per year. That’s over 74 BILLION GALLONS of products worth more then $100 BILLION. That doesn’t include the 190 MILLION bbls of oil the US exported in 2016 (prior to the oil export “ban” being lifted) worth $8+ BILLION as well as the $3.3 BILLION in NG we export to Mexico yearly.

    Texas alone exports more then $60 BILLION per year of LIQUID fossil fuels…obviously great for it’s economy.

  3. Wildbourgman on Sat, 15th Apr 2017 10:26 am 

    I like to tell people I meet complaining at the gas pump “I’m ok with the price because oil companies pay for my gas”.

    Man that always gets a rise out of folks!

  4. rockman on Sat, 15th Apr 2017 12:00 pm 

    Wildman – Same reason I get evil pleasure from pointing out how much cheaper gasoline would be in the US if the oil patch WAS NOT allowed to export refineries products made from 1.8 BILLION BBLS OF OIL this year. LOL.

  5. rockman on Sat, 15th Apr 2017 12:18 pm 

    And then mention the 190 million bbls we exported in 2016 before the “ban” was lifted. And then mention the 1.2+ BILLION BBLS we exported after we passed a law in the 70’s to “ban” the export of oil.

  6. Anonymouse on Sat, 15th Apr 2017 3:28 pm 

    And then mention ‘president’ obama, was personally responsible for it all. Dont forget to credit your ‘presidents’ role in extracting all the lead-laced tar-goop rockerman.

  7. makati1 on Sat, 15th Apr 2017 6:53 pm 

    “…more than 52,000 Americans died of drug overdoses, in the year 2015 alone…”

    “…the goal of pulling the plug on the scourge of opioid abuse in America is looking more challenging by the day. To some extent, this challenge is being aggravated by the fact that drug abuse has been transformed into a form of business that has already become the fastest booming sector of the US economy.”

    http://journal-neo.org/2017/04/15/us-struggles-to-put-an-end-to-the-deadly-drug-abuse-epidemic-2/

    “…the number of Americans using heroin has increased five-fold in the last decade, while their dependence on mind-altering substances has more than tripled.”

    “…the rate of babies born exposed to opioids more than quadrupled over the past decade. In Missouri this increase grew by another 538% since 2006.”

    It’s ALL about $$$$$. Part of the 3rd world in America.

  8. rockman on Sat, 15th Apr 2017 7:55 pm 

    mak – “…the goal of pulling the plug on the scourge of opioid abuse in America is looking more challenging by the day.”. Perhaps partially due to our new POTUS. At least by those on the left. The right tends more towards alcohol abuse. LOL.

  9. makati1 on Sat, 15th Apr 2017 8:01 pm 

    rockman, as things get worse in the U$, the use of drugs is only going to increase, including alcohol. The U$ points the finger of shame at the Philippines successful drug war and the thousands of pushers who have died already, but it is less than 10% of those who are victims in the U$ every year. Combine all of the drug sales and associated costs in America and you would total in the neighborhood of $500-$1,000 billion dollars per year added to the U$ GDP. The U$ drug war only makes the 1% richer. It will never end.

  10. Cloggie on Sun, 16th Apr 2017 5:54 am 

    Tesla Truck coming:

    http://www.latimes.com/business/la-fi-tesla-semi-truck-20170413-story.html

    If you can drive a car on batteries, you can do that as well with trucks, as the latter can carry proportionally more batteries.

    General message: you do not need fossil fuel for any vehicle on wheels whatsoever.

    Yet another nail in the coffin of the theory of those who keep claiming that renewable energy is an extension of fossil fuel and that therefor an autonomous renewable energy system can’t exist.

    It very well can.

  11. rockman on Sun, 16th Apr 2017 12:18 pm 

    Cloggie – “…an autonomous renewable energy system can’t exist. It very well can.”

    Yes it can. But it doesn’t exist now. And the 84 million ICE’s purchased in 2016 vs the 1.5 million EV’s indicates it’s not about to happen anytime soon.

    But you’re correct…it can happen. Eventually.

  12. Cloggie on Sun, 16th Apr 2017 12:47 pm 

    This was your world 150 years ago, Rockman:

    https://www.youtube.com/watch?v=FeSLPELpMeM

    And this is your world now:

    https://s-media-cache-ak0.pinimg.com/736x/5c/22/a5/5c22a5d595cfa7a2cb7e45f049e53334.jpg

    Times do change.

    Won’t be different with renewables. And it will go faster than you think.

    Abu Dhabi solar electricity price: 2.4 cent/kWh.

    New wind parks are going to be built in the North Sea without a dime subsidy.

    Offshore wind turbines of 13-15 MW are in the pipeline, if you forgive me my choice of words.

    According to “Science”, prices for solar panels will go down to 25 cent/Watt as early as 2020.

    The die is cast.

  13. Dave Thompson on Mon, 17th Apr 2017 12:08 pm 

    Cloggie, that article about electric trucks says nothing about the cost, distance, and infrastructure needed. Musk is only quoted as saying how great it will all be some day. Some day, yes some day, it ain’t today.

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