Power Line: Obama’s Gas Pains
02/19/2012 4 Comments
I have been tracking gas prices for over a year now, watching the ups and downs attempting to derive some meaning from the changes in direction, which at time appear to be random. That said, I would like to bring this Power Line analysis HERE to your attention. You can read the whole article, but this is a most interesting graphic:
I wrote about the rapid fall in gas consumption, and the economic connections HERE. Now it has come to the attentions of Steven Hayward at Power Line.
More anomalous is Obama’s explanation this week that “gas prices are on the rise again because as the economy strengthens, global demand for oil increases.” It is true that global demand for oil is probably the primary driver of the price of oil right now (though surely a risk premium because of Iran is in the mix somewhere), but here in the U.S. demand for gasoline seems to be way off, as shown in the figure below which I plotted earlier this week for my Energy Fact of the Week squib over on American.com. The figure shows retail gasoline deliveries—the best proxy for consumption—falling off a cliff starting a few months ago—before prices began to creep back up. The fall in consumption ought to be holding down gasoline prices, all other things being equal (which they never are). Is the economy about to fall over the cliff along with this indicator? That’s what a lot of people are wondering.
One reader suggested that every car owner in the nation is keeping a half a tank full just in case there is a crisis on the horizon. Another suggested that will million of people out of the work force they do not have any money to buy gas and are riding public transportation.
I am interested in your ideas. Why has gas consumptions fallen off the cliff since last October? Gas consumption has been a reliable economic indicator in the past, why not our current future?