Saturday, April 23, 2011

Weekend News

Killer Combo of High Gas, Food Prices at Key Tipping Point

Published: Thursday, 21 Apr 2011 | 2:22 PM ET
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By: Christina Cheddar Berk
News Editor

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners.
Gas station in San Francisco.

Johnson looks at the percentage of income consumers are spending on gasoline and food as a way of gauging how consumers will fare when energy prices spike.
With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers.
"Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note. 

Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—of not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share.)
What may make matters worse this time around, is there has been a steep increase in food prices that occurred as well. In other recent recessions food costs were benign, at between 7.5 percent and 7.8 percent of spending.
This year food prices have climbed 6.5 percent since the beginning of early January, according to Consumer Growth Partners.
"The combined increase in the necessities of food and energy creates a harsh double whammy for already stressed consumers," Johnson said. The last time this happened was in the recession that lasted from 1973 to 1975.
Johnson estimates that food and energy eat up about 15 percent of consumer spending at today's prices, compared with about 12.7 percent two years ago.
Of course, at lower income levels, these percentages are much higher. One sign of the stress some consumers are already feeling is that some AAA offices have already seen an increase in out-of-gas service calls, as motorists try to put off filling their tanks or drive around trying to seek out the gas station with the least expensive price.
Also some regions are being hit harder than others. Gas prices in Hawaii continue to set new highs, according to AAA data. The average price on Wednesday was $4.51, topping the prior record of $4.50 for a gallon of regular unleaded set in July 2008. 

April 23, 2011

Obama's Own Policies Are Driving The Very Speculators He's Railing Against In Regard To Fuel Prices [CDR M]

—Open Blogger

CNN had this article today discussing the problem Obama faces with rising gas prices. Ever since Obama said last week that there was nothing he good to do in the short term, the MSM keeps on repeating it without any critical thought. I assume one would have to believe gas prices are rising because of the turmoil in the Middle East in order to fall for this. But gas prices have risen almost a $1 from a year ago and are up over 100% since Obama was inaugurated. This hasn't been a short term problem and Obama's policies are making it worse.
As the dollar gets weaker, oil goes higher. Now what's making the dollar weaker right now? Ah, QE2 is a major culprit. Since Bernanke works for the President, I think we can assume that the Prez has endorsed QE2. Ironic though. Obama rails against the fat cats on Wall Street and looky here:
New lows on market indexes tend to get people's attention. But unlike falling stock or home prices, which carry clear negative implications for the economy, a weaker dollar has some significant upsides. For one, it can make U.S. companies more competitive with the rest of the world by lowering the prices of American exports for foreign buyers. And as the greenback falls, profit earned in stronger currencies abroad translates into more dollars.

The benefits of a declining dollar showed up this week in first-quarter earnings reports from multinational companies such as IBM Corp., Intel Corp., United Technologies Corp., Johnson & Johnson and Honeywell International Inc. All reported results above expectations, thanks to robust global demand for their goods and services.

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Wash. considers annual flat fee for electric cars

OLYMPIA, Wash. – Drivers of electric cars may have left the gas pump behind, but there's one expense they may not be able to shake: paying to maintain the roads.
After years of urging residents to buy fuel-efficient cars and giving them tax breaks to do it, Washington state lawmakers are considering a measure to charge them a $100 annual fee — what would be the nation's first electric car fee.
State lawmakers grappling with a $5 billion deficit are facing declining gas tax revenue, which means less money to maintain or improve roads.
"Electric vehicles put just as much wear and tear on our roads as gas vehicles," said Democratic state Sen. Mary Margaret Haugen, the bill's lead sponsor. "This simply ensures that they contribute their fair share to the upkeep of our roads."
Other states are trying to find solutions to the same problem, as cars become more fuel-efficient and, now, don't use any gas at all. 

$6.00 A Gallon. Count On It.

—Dave In Texas

All it will take is an increase in the current per barrel price of $112 to $175/bbl, and we'll see the highest price per gallon of gasoline ever. Current average price at $3.84 a gallon.
The price of crude oil is 55% of the cost of a gallon of gasoline.
And while we all know Obama is on record as thinking this is a "good thing", the make-believe-media is still busy covering his sloppy tracks. In this case, where he blamed a man who asked him about what the hell he's doing to address it by telling him to trade in his gas guzzling vehicle.
Yehzoved by the faithful.
It's the "speculators." It's the "ugly consumers."
It's not the lack of production (except for Brazil and China). Because in Obama's world, "supply and demand" are confusing and tedious concepts.
Shut up and go buy a high mileage Volt for fifty-thousand bucks or whatever the hell it costs.

via Slublog

Kliphnote: Remember one thing, Sunshine, Obama will blame gas prices on
someone else. Nothing is ever his fault. Just ask the Obamabots.
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