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Economy Slips On Oil Patch

Posted by Rick · October 18th, 2004 · No Comments

I’ve been wondering lately if I should take the incredibly rising oil prices as a positive sign.

Gasoline in Clovis has gone from about $2.19 per gallon to about $2.45 per gallon. At least, this is what my little book shows me. (I track my gasoline usage for tax purposes and I include the cost per gallon in my log.)

The thing that worries me is that, although I think this might be a positive sign overall for the country, there’s a risk to it.

Robert Brusca of FAO Economics noted that just about all past recessions were preceded by an oil price shock. He said Monday that current prices, coupled with sluggish job growth, falling consumer confidence and the Fed raising interest rates, pose a serious threat to economic growth. Chris Isidore, “Oil-shocked into recession?” (October 18, 2004) ¶ 14, CNNmoney.

My wife and I are by no means poor — we might actually be among the last of the middle class to be squeezed out into one of the other classes as the “middle” disappears. And by that time, we might actually have a shot at staying with the “haves” — albeit as part of the minority of that group that still fights for the “have-nots.” We will never, however, be what George Bush calls “my base.” (Incidentally, some conservatives are fond of pointing out that Bush made this comment at a fundraiser, as a joke. They fail to note that the “joke” would not work if there weren’t some truth to it. Furthermore, a look at the funding of the Bush campaign reveals just how true it is.)

At any rate, one of the ways we’re ensuring that future is that we’ve cut back on spending money for “fun” things as gas prices have continued to rise. We’ll probably stick with our tiny 11,000 square-foot lot for longer than we’d planned. No new cars. Fewer vacations. And I guess we won’t go out to dinner as much.

We have done pretty well financially and have no kids. We often wonder how people with kids must be adjusting. Therein lies the explanation for why rising gasoline prices are so destructive to our economy as a whole. Money spent on gasoline is money not spent on other things. So what was it the company you work for does again? Unless you’re drilling for oil or selling gasoline, your job is one of those impacted by the fact that fewer people can afford what your company sells (or does).

The big worry comes this winter. Even Clovis, California, gets cold.

Now more and more people are worried about what happens to the economy when it comes time to fill home heating oil tanks. Will we have a shortage — like flu vaccine? Probably not, but high prices will pinch. Kathleen Hays, “Greenspan’s oil prayer” (October 18, 2004) ¶ 4, CNNmoney.

Oh yeah, the good sign? I’m telling myself — because it feels good to think so, even if it turns out I’m wrong — that it’s an indicator Bush is going to lose in the upcoming election . . . and he knows it. Since a new President would start fixing the things that have allowed oil companies to prosper under an oil-owned-and-operated Administration, prices have to be hiked dramatically between now and January 20. After that, G-d-willing, prices will return to more humane levels.

If that happens, my wife and I plan to celebrate by going out to dinner again. 😉

Categories: Oil & The Presidency


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