|
There seems to be a near consensus on
the idea that, somehow, the U.S. economy will handle the current “oil
shock” better than it handled the one three years ago, an event that
preceded the worst financial crisis since the Great Depression by just a few
months.
Typical of the commentary in this vein
is this New York Times report
today:
U.S. Economy Is Better Prepared for
Rising Gas Costs
By JAD MOUAWAD and NICK BUNKLEY
The increase in energy prices is
beginning to resemble the rise in 2008. But this time, the American economy
may be better prepared for higher fuel costs.
…
One big reason is that consumers and businesses have learned lessons from the
last oil shock. Many
drivers, for example, have given up their gas-guzzling sport utility
vehicles. Automakers, which are selling more fuel-efficient
cars than five years ago, reported higher sales in February even as gas
prices rose.
Industries like airlines and trucking,
which are most severely affected by fuel prices, have passed on their higher
costs almost immediately instead of waiting for the price increases to hammer
profits.
And much of the rest of the United
States economy is far less dependent on oil than it used to be. Oil
consumption has dropped more than 5 percent since 2005, while natural gas use has
risen 10 percent. A glut of domestic natural gas has kept prices low,
providing a lift to industries like chemicals and pharmaceuticals and
tempering the price of electricity, much of which is generated from natural
gas.
I don’t know – does it
really make that much of a difference if it costs you $70 to fill your tank
versus $100, as is the case for 39-year old fashion designer Tival Williams
in Brooklyn? Either way, it’s a big hit to the psyche of the American
consumer who still accounts for a freakishly large share of U.S. economic
output.
Perhaps more importantly, what you
don’t hear much about these days is how commodity traders and
speculators of all kinds are gearing up for another liquidity-fueled oil
price spike, one that is already underway in other sectors of the natural
resource world and where energy has been a clear laggard. Bidding oil prices
to new record highs in 2011 – after many other commodities have already
seen new all-time highs – may make $147 oil seem cheap, quickly
negating any positive effects of reduced domestic oil demand.
Tim Iacono
Iacono Research.com
|
