Pump-Up the Bullet

April 10, 2011


Gain may be temporary and uncertain; but ever while you live, expense is constant and certain: and it is easier to build two chimneys than to keep one in fuel.
Benjamin Franklin

(Illustration found here via Google Images).

From CNN:

Gas prices have jumped nearly 20 cents over the past two weeks, approaching the all-time high, according to a survey published Sunday.
The average price of a gallon of self-serve regular is $3.76, the Lundberg Survey found. The previous survey three weeks ago found an average of $3.57.
That means prices are now just 35 cents — “within firing range” — of the all-time high of $4.11 set in July 2008, said publisher Trilby Lundberg.
“This doesn’t mean that we will get there,” she said. “Crude oil will decide.”

“Unless crude oil relents and slips, we can expect a further rise at the pump because pump prices do not reflect all of the crude oil price hikes that have occurred,” Lundberg said.

The CNN piece also noted some gas prices from around the US — Denver – $3.49, Boston – $3.71, Chicago – $4.11, and on and on, though, the “highest average price was in the San Francisco Bay area at $4.13.”
And, if you travel a bit further north up the California coast, you’ll be pumping out the big bucks — yesterday, I paid $4.35 a gallon for regular.
Are we back to where we was?

The price of oil climbed on Friday, reaching up, getting close to that record from nearly three years ago.
From Calculated Risk this afternoon on possible upcoming hazards to the US economy, a couple most potent:

Higher oil prices and a possible supply shock. Risk increasing.
U.S. oil prices have risen to $112.79 per barrel. At the moment this appears to the be the top risk to the U.S. economy. With gasoline prices over $4 per gallon in some areas, this has to be starting to hurt.

Possible Federal government cutbacks (even shutdown). Risk increasing.
Although there was a budget deal reached on Friday, the fiscal cutting rhetoric has increased.
There is even the possibility (remote) of the first default in history because of political ideology.
The “debt ceiling” debate is just political grandstanding, but you never know what will happen.
Even assuming the debt ceiling is raised, it appears there will be more cutting than originally expected – and that will be a drag on U.S. growth this year.

One wonders what will happen on a second go-around with a huge spike in oil prices.
The price peaked at $145 per barrel in July 2008, but quickly plunged way-deep, dropping to $30.28 by late December that same year — and here we are again.

And to play at words with Mr. Franklin –  it’s easier to have two cars, but fuel for just one.

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