Thursday, January 12, 2012
$5 a gallon gas? Not so fast
Some are predicting $5 a gallon or higher gas. Nothing like some splashy shocking headlines about more saber rattling to push prices up and get speculators running to the trough. I see it as only a minor glitch. Why? The fundamentals aren't there. The much touted Christmas buying frenzy actually didn't happen as was predicted. Sales were up a scant 0.1% and not the 2.5% as was stated. From my December post It's the economy stupid retailers had to slash prices to get anybody into the malls and even then it was with a tight budget and bargain in mind.
On the global scene what do we have? Everybody says that China is sucking up the world supply but even their economy is slowing down. This is not to mention the massive austerity programs that are hitting Greece, Spain, Ireland, England and others in the European union. We know that won't create high demand. People too are getting creative in changing their driving habits. What was once a suggestion to carpool is now becoming a necessity. Toll roads aren't helping matters here. Get slapped with a $7 to $10 a day toll and those at the bottom of the income chain will find new routes. So if you have to leave earlier for work just to get by then so be it.
So I think it may inch up to the $4 a gallon mark but not for long. Iran may add a bit to the supply of world oil but not as much as everybody thinks. In fact most of the oil we get here in the U.S. comes from Canada. We also know there'll be no bomb bomb bomb bomb bomb Iran as Mr. McCain would like. To do so would bring the wrath of the arab world and with all their oil out of the picture we wouldn't have a chance of continuing any aggressive actions. We seem to have forgotten how our supply system works not to mention what damage it would do to our economy.