Skip to comments.Media Ignore The Largest Consumer Price Decline in 56 Years
Posted on 12/22/2005 8:36:18 PM PST by Only Waxing
Ever since Hurricane Katrina made landfall in late August sending oil prices to $70 per barrel and gasoline above $3 a gallon, the media have been in a panic over a return of 70s-style inflation. Such concerns reached a fevered-pitch in October when a gauge of consumer prices rose by the largest amount in 25 years. Yet, when the Labor Department released numbers last week showing that inflation had declined by the greatest percentage in 56 years, rather than using this data to ease the publics concerns about rising prices, the press either downplayed the report or totally ignored it.
Back in October, when the September consumer price index (CPI) jumped by 1.2 percent, media reports were full of phrases like Hurricanes Katrina and Rita helped make energy prices soar in September at the fastest rate on record, and Inflation in September was the highest since 1980...
(Excerpt) Read more at newsbusters.org ...
Yeah prices have fallen back to where they were in ...uh...July.
You heard it here first.
Based on the chart you provided, oil prices are back to where they were in March. Thank you for the clarification.
With so many fictions who has time for the truth?
So oil went up then down then up then down, nothing else
I buy regularly has gotten any cheaper only more and
more expensive or the price has stayed flat. So where
is this good news? Generally doesnt an news item have to be either tragic or bizzare or sensational to get MSM
coverage (Fox included)? Arent most of these whack jobs sitting in hair and make-up most of the day any way,
and only news junkies and geeks read papers. And the
rest are working their butts off hoping their job wont get out scourced to India or China next!
Inflation not oil. It further states...
Two months later ...the November CPI fell by 0.6 percent, the greatest amount since Harry S. Truman was president
Uh, you actually heard it here (and from a number of other FReepers, too) back in early August before the hurricanes hit. The hurricanes delayed the inevitable; Chinese and Indian demand will not be the overwhelming forces so well-hyped earlier on this year.
We'll see a plateauing of price in the low 50s for perhaps 6 months to a year, then, absent another geopolitical scare -- say, instability in Iran -- a short trip to the low 40s, high 30s.
The other wildcard is an evilly cold winter in the NE (because that's the only area in the US that the mkt watches). The cracks will become even more outrageous, immediately upon the mkt's perception of such a cold winter being likely, or even possible, in this case, and one will have to wait to put on the trade.
However, the crack spreads are GOING to stay quite high for an indeterminate time, until refining capacity catches up. The bottleneck is not in crude, but in product. Putting on a 3:2:1 December 2006 crack next March looks like nothing other than money for jam.
Depending on where you live, your cost to heat your home is either depressed artificially by state utility pricing boards, until such time as utilities can file for a rate adjustment, or artificially high in a catch-as-catch-can market.
Those who heat with #2 oil get hammered the worst, almost invariably. This has been true at least since the '70s.
However, and I daresay you won't believe this (nor do I care), regulated utilities are in a race against time to avoid becoming the next GM. Actual cost of fuel to heat your home -- again, depending in which state/locality you happen to live -- is just 3% to 20-odd % of the bill you receive each month.
In my case, in St. Louis County outside St. Louis in Missouri, the cost of fuel as a proportion of the monthly bill is -- hold your breath -- 7.1 $ as of September. The biggest portion of the bill happens to be direct and indirect taxes, cumulatively, but the largest single ITEM in the bill (not ON the bill, but as a component) is the accelerating overhead of pension costs and capital debt.
Capital debt is acceptable, of course; plants wear out over time. Having written control software for our local gas utility for many years (Laclede Gas), I can tell you definitively that the pension scheme in that company is a trainwreck waiting to happen. Nothing so bad as GM's situation, but the employees have feasted FAR too long at the trough.
Personal views aside, the facts on fuel costs as a percentage of monthly bills come straight from the Missouri Public Utility Commission, and you can look them up online at your leisure.
I always loathed Jimmuh Carter, but equally, I love sweaters. And they're far cheaper to wear than to pay to keep the ambient temperature above 65 degrees or so. Or 60.
Merry Christmas to you!
"the media have been in a panic over a return of 70s-style inflation"
Hey, those were the hay-days of Jimmah Carter, so what are they worried about?
Excellent analysis. The top was in when oil couldn't make a new high even as Rita, then a category 5 hurricane, threatened the remaining GOM infrastructure.
Please let us know how well you make out shorting oil in '06.
Sorry I don't trade commodities, nor would I encourage anyone else to do so. I sincerely hope there is nobody out there so foolish as to trade significant portions of their net worth based on things they read on the internet!
Thought so but just had to confirm that you were spewing from the mouth. LOL
Sheesh, such hostility, and on the eve of Christmas no less. Sorry if I offended you. I was just sharing an opinion.
<< So oil went up then down then up then down, nothing else
I buy regularly has gotten any cheaper only more and
more expensive or the price has stayed flat. >>
Nothing has substantionally gotten and/or has stayed more expensive.
But, as the direct consequence of the Fed's deliberately-inflationary increasing of the money supply, the value [IE the purchasing power] of the US Dollar has halved since January 2001.
Two December 2005 US Dollars are required to buy what One December 2000 Dollar would buy.
Entirely dependent on the rate-setting mechanism in your state (and sometimes your city and county, too). Without specific knowledge of your situation regarding this mechanism, there's no comment possible, other than the **guess** that in your state, intra-state gas pricing may not be regulated, or only very lightly so.
Is this before or after the month long air war that will be required to destroy Iran's dispersed nuclear program?
I don't think the plan is to destroy the weapons and leave the shooters. I think the plan is to kill the shooters.