Something similar happened in the late 1980's, and the US prospered greatly from it. Asia was in a financial mess and a glut of oil hit the market. Gas prices dropped and remained low for several years. This provided lower transportation costs, lower food costs, more car sales, more vacation travel, and led the way to a booming economy.
The US lived through it's hard times in the last few years. I think substantially lower fuel prices are just the thing needed to get things moving again.
So......falling gas prices and more money in my pocket is a 'bad' thing according to this article? Hmmmmm, I am of the opinion I will have more cash to buy more 'things' thereby contributing to a healthier economy than I would spending gas money that flows towards energy sources based outside of this country.
Falling gas Prices !!! What world do you live in ? Where I live we have a one party government. ( You know, like Hitler, Stalin, Castro, and others had.) Any way, We have seen MAYBE a 5 cent drop in the past three months. Gas prices ARE NOT held high by crude prices. They are the product of local greed, government corruption, and corporate greed.
I agree with you to a point. BUT !!! In the area I live in, gas prices are held extremley high by local business men with a monopoly situation( only three owners in town. ). They can buy any law or regulation they want because of party polotics. We can drive 35 miles and save a little but is it worth it. One party government is NO government, only dictatorship. And don't tell me to vote them out. They control the voting machines.
This article is so seriously flawed and based on false assumptions. I just read an article by the chief economist at Morningstar who said the exact opposite - falling gas prices put more money in consumer's pockets, thereby propping up our consumer-based economy. The correlation between stalling job growth and falling oil prices is non-existent. Stalling job growth has more do with future uncertainty from a corporate perspective and the European crisis, not with lower oil prices. Job growth in the United States has stalled because companies are not sure of where demand for goods and services will be a year from now or 5 years from now. Our economic recovery, tepid as it may be, is still maintaining a 2% rate, slow, but stable. This article about the correlation between lower oil prices and stalled job growth is pure nonsense.
The amount of money falling gas prices (thanks to the Obama economy) generates is inconsequential compared to the amount of growth the economy needs. CLEARLY gas prices are falling because of the global slowdown leading to reduced demand. It is this pesky thing called SUPPLY and DEMAND.
Economists are spewing nothing but scare tactics. Lower fuel costs is helping my economy and my guess is that is true for everyone. I am sure at least some of the money companies are saving on fuel will be diverted to job creation. Also, money that people are saving on fuel costs might end up be spent on durable goods, further boosting the economy. Lower fuel costs will eventually trickle through our entire economy with lower production and shipping costs we should see lower food costs and lower costs for everything in general.
If you tell speculators that you are going to look into what they are doing, they pay attention. There were stories about speculators buying tankers of oil then letting it sit offshore until the price rose. This sort of manipulation should be stopped once and for all.
I cannot believe your article!!! The first major increase in prices several years ago, along with the housing bust and many other factors is what caused our economy to tank. When price of gas increased, business passed along the cost to the consumer and when they went back down, the prices did not go down accordingly. In fact, businesses made a whole lot more money when prices of gas were high the first go around, but they didn't increase pay accordingly and they started laying off workers. The price of gas goes down, you'll see a lot of businesses picking up again and hiring due to more people making longer trips or actually considering driving longer miles for a job. What is wrong with you lady? Then, in your breakdown you show that for a gallon of gas costing only $1 and I am thinking... yep, that is what I figured all along. We've been scammed all these years!!!!
What really happened lady is when we went to war with the middle east, Arabs wanted to bankrupt us so they got the price of oil up really high. They knew our military would require a lot of oil! They knew our infrastructure was broken because they broke it by pushing cheap $16 - $20 per barrel oil. Price of oil needs to go down further. Period.
I'm glad I wasn't the only one confused by this article. She never explains how higher gas prices improve the economy. She just throws out the notion that a $0.20 increase in stocks means a better economy. I reject her assertion that the low gas prices are a bad thing, especially when our economy was "firing on all cylinders" when gas was considerably cheaper.
So the average commuter who buys maybe 30 gallons of gas a week now has an extra $60 a month to spend. This hurts the economy? Instead of sending the money out of the country, he will more likely spend the money on locally made products. This hurts the economy? The money will trickle slowly upwards, enriching the suppliers of the suppliers of his vendors. This hurts the economy?
Ask some questions, girl. Don't just write what you are told to write.
The only proof of the trickle-down theory I've seen is that the University of Chicago has named a new building after its inventor. Probably paid for by donors who didn't have any other way to trickle their money down.
If the wealthy were taxed today as they were in the Eisenhower years, then, yes, their money would trickle down. But they need to be squeezed before that happens.
Lower gas prices help the economy. The pump at the corner is my investment flag. Last year when gas went down a dime, I knew that the economy would improve, and I invested. When the price of gas started upwards, I sold, knowing that the economy was at a minor peak and stocks would soon be going down. I turned $22,000 into $28,000 in one such swing in December, investing in solar stocks. Anyone can make money using the pump price of gas to predict the stock market ups and downs.
Invest in healthy companies that are heavily shorted, and snatch them when they're cheap. Presently, I'm playing in GTAT, SPWR and FSLR. The Dow is banging on the bottom, but these stocks have begun to exhibit signs of life already and are slowly heading upwards again. I will wait until the Dow is once more above $13,000 to sell.
She didn't say that higher gas prices improves the economy. She's pointing out that a booming economy leads to higher gas prices and a poor economy leads to lower prices. This is due to the fact that in a booming economy there is greater demand for gas thus driving the price up and conversely in a weak economy the demand is weaker thus driving down prices. This is basic economics and it's a bit disheartening to see so many confused by this.
She wrote "But the trade-off for lower oil and gas prices is slow growth and tepid job creation." The implication is that the first caused the second. That the cost of the low gas prices is slow growth and tepid job creation. Do you believe this?
It seems much more likely that, globally, slow growth and tepid job creation would lead to low gas prices. Low gas prices help correct slow growth and tepid job creation, until the price of gas rises again and limits human activities.
Tepid growth develops when costs rise, not when they fall.
Could it be that she is presenting the point of view of the oil-producing states? For them, certainly, "... the trade-off for lower oil and gas prices is slow growth and tepid job creation." But is this true for the world as a whole?
@rnrstar June 27, 2012 11:25 AM EDT QUOTE: She didn't say that higher gas prices improves the economy. She's pointing out that a booming economy leads to higher gas prices and a poor economy leads to lower prices. This is due to the fact that in a booming economy there is greater demand for gas thus driving the price up and conversely in a weak economy the demand is weaker thus driving down prices. This is basic economics and it's a bit disheartening to see so many confused by this.
So, you are saying that the economy has really been booming since 2010? I paid $2.89 a gallon in December of 2010 and two months ago I was paying $4.44 a gallon. All I have heard in the media has not indicated that the economy is booming.
It's very simple. If I have more money in my pocket because I am now paying less for essentials (yes, gasoline is an essential) then I can spend that money on non-essentials. Thus, I am able to put more money back into the economy. The price of oil is mostly reactionary to world events, that reaction is cause mostly by speculators.
While there is some truth that the price of oil (or anything else for that matter) can increase as the economy improves, the current overly high prices of gasoline (oil) have been a major component in inflation and less consumer spending. The price of oil is artificially high due mostly to speculation.
This makes perfect sense. After all, when gas was $2.00/gallon before GWB Jr, unemployment was so much higher. Oh, wait a minute, the economy was actually doing great, and unemployment was at an all-time low. Guess you're about as wrong as they come, Ms. Schlesinger. Perhaps you're upset because you have money invested in oil stocks?
If you think about it, when oil prices drop, that means that cost for things like heating and transportation drops. That puts more money in the pockets of the companies, especially airlines and shipping companies like UPS and Fedex, which, in turn, gives them more flexibility in hiring.
I will say I'm actually somewhat surprised how civil people have been about the fleecing of America. After all, I was sure people were going to start robbing fuel trucks when the price went above $3.00/gallon. Anything over $2.50/gallon is simply greed, and should never be tolerated, with exception of a time yet to come when the lowest income in America is $50,000 /yr.
The thought that high unemployment and low gas prices are somehow linked is absurd.
It's not absurd, it's basic economics. With higher unemployment you have fewer people driving to and from work or using gas to do work thus reducing the demand for gas which then reduces the prices for gas. Like I said, basic economics.
When bush II was president I was paying $4.50 a gallon and the economy was going down the tube already. The excuse then was a hurricane in the Gulf of Mexico.
retiredgustav... where were you living? The average cost for a gallon of gas when Obama took office was $1.80. If you were paying $4.50 then, you were single-handedly driving up the average.
Jill you are an absolute moron if you believe that paying more in fuel represents a better economy and that we should be so lucky to be paying more for fuel. The price goes up when people speculate that its supply is going down and raise the price on the stock market. We were paying around $2.40 a gallon avg in 2006 during our peak economic prosperity.
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The US lived through it's hard times in the last few years. I think substantially lower fuel prices are just the thing needed to get things moving again.
Move out of that republican town.
What really happened lady is when we went to war with the middle east, Arabs wanted to bankrupt us so they got the price of oil up really high. They knew our military would require a lot of oil! They knew our infrastructure was broken because they broke it by pushing cheap $16 - $20 per barrel oil. Price of oil needs to go down further. Period.
Ask some questions, girl. Don't just write what you are told to write.
The only proof of the trickle-down theory I've seen is that the University of Chicago has named a new building after its inventor. Probably paid for by donors who didn't have any other way to trickle their money down.
If the wealthy were taxed today as they were in the Eisenhower years, then, yes, their money would trickle down. But they need to be squeezed before that happens.
Lower gas prices help the economy. The pump at the corner is my investment flag. Last year when gas went down a dime, I knew that the economy would improve, and I invested. When the price of gas started upwards, I sold, knowing that the economy was at a minor peak and stocks would soon be going down. I turned $22,000 into $28,000 in one such swing in December, investing in solar stocks. Anyone can make money using the pump price of gas to predict the stock market ups and downs.
Invest in healthy companies that are heavily shorted, and snatch them when they're cheap. Presently, I'm playing in GTAT, SPWR and FSLR. The Dow is banging on the bottom, but these stocks have begun to exhibit signs of life already and are slowly heading upwards again. I will wait until the Dow is once more above $13,000 to sell.
It seems much more likely that, globally, slow growth and tepid job creation would lead to low gas prices. Low gas prices help correct slow growth and tepid job creation, until the price of gas rises again and limits human activities.
Tepid growth develops when costs rise, not when they fall.
Could it be that she is presenting the point of view of the oil-producing states? For them, certainly, "... the trade-off for lower oil and gas prices is slow growth and tepid job creation." But is this true for the world as a whole?
QUOTE: She didn't say that higher gas prices improves the economy. She's pointing out that a booming economy leads to higher gas prices and a poor economy leads to lower prices. This is due to the fact that in a booming economy there is greater demand for gas thus driving the price up and conversely in a weak economy the demand is weaker thus driving down prices. This is basic economics and it's a bit disheartening to see so many confused by this.
So, you are saying that the economy has really been booming since 2010? I paid $2.89 a gallon in December of 2010 and two months ago I was paying $4.44 a gallon. All I have heard in the media has not indicated that the economy is booming.
It's very simple. If I have more money in my pocket because I am now paying less for essentials (yes, gasoline is an essential) then I can spend that money on non-essentials. Thus, I am able to put more money back into the economy. The price of oil is mostly reactionary to world events, that reaction is cause mostly by speculators.
While there is some truth that the price of oil (or anything else for that matter) can increase as the economy improves, the current overly high prices of gasoline (oil) have been a major component in inflation and less consumer spending. The price of oil is artificially high due mostly to speculation.
If you think about it, when oil prices drop, that means that cost for things like heating and transportation drops. That puts more money in the pockets of the companies, especially airlines and shipping companies like UPS and Fedex, which, in turn, gives them more flexibility in hiring.
I will say I'm actually somewhat surprised how civil people have been about the fleecing of America. After all, I was sure people were going to start robbing fuel trucks when the price went above $3.00/gallon. Anything over $2.50/gallon is simply greed, and should never be tolerated, with exception of a time yet to come when the lowest income in America is $50,000 /yr.
The thought that high unemployment and low gas prices are somehow linked is absurd.