Average price of gas nationwide approaches $5 per gallon with drivers in California paying an eye-popping $6.40 and the cost of filling up an average car rises to $94
US national average price of gasoline hit $4.97 for a gallon of regular on Tuesday
It’s an increase of 26 cents from a week ago and $1.91 from a year ago
Twenty states and D.C. now have an average price higher than $5 per gallon
California continues to lead the nation with prices averaging $6.40 per gallon
Biden has blamed Putin and claims the US economy is in a ‘position of strength’
…
And the sun also sets in the evening.
Transportation Secretary Pete Buttigieg insisted that prices would come down eventually.
For the halibut, I plugged in the 50 cents/gallon I was paying in 74 into the BLS CPI calculator. Inflation adjusted that would be $3.14.
Gas cracked $1 after the Iranian revolution, around 80. That works out to $3.76.
The $4 point gas cracked in June of 2008 works out to $5.54 now.
The point I was trying to make to my neighbor yesterday was that, within months of a jump in the price of gas, the economy slid into recession.
And Powell is saying he really only has one priority: kill inflation, just like Volker, and we know how that turned out.
For those who don’t recall, the US was already sliding into recession before Volker strangled it with high interest rates in 81. I maintained a graph of order backlog at the pump seal company. After rising though all of 78 and 79, that graph was headed south in 80. This graph from Fred can be set to cover 79 through 82. You can see how GDP growth flattened in 80, started to rise again, then flattened again when Volker’s policies took hold in 81.
If it were JUST gasoline that’s going up, most people could probably manage until it “eventually” comes down. BUT, the problem is that nearly everything is going up in price now. The 70s and early 80s were not a particularly happy time economically, I don’t want to go through that again.
If it were JUST gasoline that’s going up, most people could probably manage until it “eventually” comes down. BUT, the problem is that nearly everything is going up in price now. The 70s and early 80s were not a particularly happy time economically, I don’t want to go through that again.
I forgot my second paragraph. At this point, because the cost of gasoline has diverted a goodly percentage of consumer spending (~2%) away from other things, and because natural gas prices are also high … I expect the recession to begin early next year, in the winter, when people have to deal with BOTH the high gasoline prices AND the high gas prices at the same time.
I expect the recession to begin early next year, in the winter, when people have to deal with BOTH the high gasoline prices AND the high gas prices at the same time.
Major premise there: People HAVE jobs that require cars to commute.
Major premise there: People HAVE jobs that require cars to commute.
I don’t understand this comment? When discussing a whole population, the important factor is what percentage of people does it apply to. And using gasoline and gas applies to a heck of a lot of the population. Likely enough people that if 3-5% (the sum of the increase of gasoline and gas expenses overall) of their personal income is redirected to energy rather than to other things (consumer goods), that a recession may indeed happen.
I expect the recession to begin early next year, in the winter, when people have to deal with BOTH the high gasoline prices AND the high gas prices at the same time.
Nat gas price hysteria usually starts in August/September, then goes into high gear in January, when the market seemingly discovers, for the first time, each year, that winters are cold. Of course, this fall, we will have the Europeans competing for gas to replace lost Russian supply.
Thanks to LIFO inventory accounting, every price increase will be immediately passed to consumers.
iirc, gas prices cracked $4.00 in June of 2008, and the wheels came off the economy before the snow flew. In a month, we will see of Q2 GDP continued the downtrend of Q1.
Here’s another echo of 73:
In the winters of 1972 and 1973, Burns began to worry about inflation. In 1973, inflation more than doubled to 8.8%.
So, comparing 2022 to 73, we have a general “shortage” narrative being touted by the media. We have a war that is impacting oil supply. Inflation is over 8%. We have a (censored) crisis.
Biggest difference between now and 73, I had a full head of hair in 73.
What if the government tried to impose a 55mph speed limit, like we saw in 74? What would the reaction be? Caravans of semis running down the highway at 90, of whatever they could manage, with “FREEEDOM” banners flapping in the wind?
Nat gas price hysteria usually starts in August/September, then goes into high gear in January, when the market seemingly discovers, for the first time, each year, that winters are cold. Of course, this fall, we will have the Europeans competing for gas to replace lost Russian supply.
The hysteria may cause stock markets to move about in all directions. But I’m not talking about the hysteria part, I’m talking about the “writing of checks” (or nowadays online bill pay) part of it. If people now are spending an extra $200+ a month on gasoline instead of on other things (consumer goods or services), due to many more people employed, at higher wages, the economy is still moving along somewhat (yes, Q1 was negative, but that was “technical”, not necessarily real). BUT, suddenly add to that extra $200+ month on gasoline another extra $300+ a month for gas, perhaps the reduction of $500+ in spending on other stuff could tip the economy into recession despite all the extra people working at higher wages. I haven’t run the exact numbers, but my gut is telling me that it is so.
BUT, suddenly add to that extra $200+ month on gasoline another extra $300+ a month for gas, perhaps the reduction of $500+ in spending on other stuff
That is plausible. Over 50 years, there has been a correlation between gas prices and recession. The only failure that I can see in the data is 1990, as I don’t recall gas jumping a lot in price.
Data here shows gas only going up from $1.060 in 89, to $1.217 in 90 and $1.196 in 91, but those annual averages may conceal a spike caused by the Iraqi invasion of Kuwait. The 20% increase from 89 to 90 pales compared to the doubling in 73-74 and between 78 and 81.
A lot of helicopter money was thrown at working people in 20, but it is now night.
Will Rogers "(a POTUS) was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellows hands. "
For the halibut, I plugged in the 50 cents/gallon I was paying in 74 into the BLS CPI calculator. Inflation adjusted that would be $3.14.
Gas cracked $1 after the Iranian revolution, around 80. That works out to $3.76.
The $4 point gas cracked in June of 2008 works out to $5.54 now.
It is also important to look at the relative cost of gasoline when you factor in the miles per gallon that you can get now. Even a mid size RAV4 hybrid can get around 40 MPG which which is roughly 50% better than a non-hybrid 2008 RAV4 and maybe double(or more) what that size car could have gotten in 1974 or 1980.
The critical phrase in that statement was “can get”. The problem is that in recent years there has been a push to supersize cars and trucks which has negated a lot of the advances in car efficiency. Even so I just looked it up and a 1975 Ford F-150 got 10 MPG when I googled it. Google come up with 25 MPG for a 2022 Ford F-150 when I searched for it. (There are of course lots of variables like the engine size so that is simplistic.)
It would be hard to figure out but the inflation adjusted cost per year for gasoline for a car might not be all that much higher than in the past because of the better gas mileage now.
The 70s and early 80s were not a particularly happy time economically, I don’t want to go through that again.
I was just starting out on my own in the early 80’s, with no fall back position. Sink or swim. Was very hard to both get food in the belly and a roof over the head, with the expense of a used car being crippling. Sad to see Youngest now dealing with the same, better in that he’s older than I and has been taught to save, so he has a war chest. Worse given the insane rents where he is making his entry level professional job almost impossible to live on. He has already floated stopping the 6% of salary he contributes to the 401K that the job matches, but we have talked him out of it so far. I would sooner gift him that money annually than have him give up the match.
It’s never easy to see your kids struggle, but he will learn some excellent lessons from this. He also has more resources, (us,) than his friends have, or that I had. I just hope it doesn’t last too long.
One of my favorite nephews, faced with insane housing costs in San Francisco where he worked with no car, literally rented the closet in the hall of the apartment of an acquaintance to sleep in, with use of bathroom and kitchen during limited hours.
He saved a fortune for two years, and then moved on.
"One of my favorite nephews, faced with insane housing costs in San Francisco where he worked with no car, literally rented the closet in the hall of the apartment of an acquaintance to sleep in, with use of bathroom and kitchen during limited hours.
He saved a fortune for two years, and then moved on."
lol, amazing what a person can tolerate when they’re young.
Back in my younger days, a group of friends moved to LA because the job situation
was so bad in the Midwest. 1 friend, Latino heritage, stayed in a tent in the
backyard of a house that about 10 of them were renting. They dubbed him the “migrant”
for his living situation, lol. ( he took no offense at that, close friends just giving
each other the business, lol )
One of my favorite nephews, faced with insane housing costs in San Francisco where he worked with no car, literally rented the closet in the hall of the apartment of an acquaintance to sleep in, with use of bathroom and kitchen during limited hours.
I rented a room in someone’s house, with bathroom and kitchen privileges. Youngest is essentially doing the same thing, having a room in a 3 bedroom townhouse that he shares with two other people. He pays $900/month, down from $1K when we extended his lease from 3 months to a year. Two years ago that would have at least gotten him a studio, if not a 1 bedroom apartment all to himself.
My oldest nephew left San Fran last year for NYC. His work is still for a San Fran company. He is now a manager of a few other programmers. He is pondering going back to school for an advanced degree. He will be leaving his job as the vesting of his options completes in all likelihood. He has a lot more of his MIT friends in NYC.