Skip to comments.Can Americans Handle $150 Oil?
Posted on 02/21/2012 5:40:44 PM PST by blam
Can Americans Handle $150 Oil?
February 21, 2012
Douglas A. McIntyre
The International Energy Agency said Europe could cope with a supply shortage brought on by a drop in imports of crude from Iran, but that prices might temporarily reach near the $147 a barrel peak of 2008. The chief of large energy firm Vitol told the Financial Times that crude could reach and stay at $150. It is not entirely possible to determine what oil at $140 or $150 would do to the average American household budget, but a look at Census data suggests that the effects would be harsh.
The Consumer Expenditure Survey done in 2010 showed that the average consumer unit spent $49,067 in 2009. That unit:
includes families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share expenses.
The budget for these households was very tight. More than $10,000 went to shelter. Another $6,400 went to food. Over $3,100 went to health care. Another $5,500 went to pensions and Social Security. More than $2,700 went to vehicle purchases.
The Census data showed that in 2009, a consumer unit spent more than $3,600 on utilities, which included heating. Another $2,700 was spent on gas and motor oil.
Crude prices averaged approximately $90 a barrel last year, and in late summer they were below $80. Oil prices at $120 would be a 50% rise from the amount around Labor Day. At $150, the figure is nearly double.
What Americans spend on gas, oil and home heating oil varies widely from place to place and family to family. Urban dwellers may not own cars. Commuters in some places have 50 mile round trips to and from work. People who live in cities are more likely to weather high gas prices than others. But for those others, gas prices at or above $4 a gallon could be catastrophic. For people who drive a car that gets 25 miles per gallon, the cost of a medium length commute could increase by several hundred or even more than $1,000 this year. The government data on consumer spending shows that amount would be a burden, and other items these households buy might not be affordable at all. The Census data shows that entertainment expenditures are $2,700 a year. Apparel is just over $1,700. And food consumed outside the home was just over $2,600. Each of these activities is essential to consumer spending activity, which remains about two-thirds of gross domestic product.
Economists remain worried about what high fuel prices will do to GDP. It is really not that hard to tell. The typical American household budget is not terribly elastic, and consumer spending is about the only area where it has flexibility if energy prices jump.
No, our economy will crash as a result.
The pain would be worth it.
Our family budget couldn’t handle it for any extended period of time.
No. We will all cut back on all discretionary spending in order to try to put fuel in our cars and food on the table. Food prices will soar because farmers and truckers must raise their prices in order to survive. No one who drives or eats should vote for any Democrat candidates if this occurs.
We will do nothing by car. We will move on to bicycles for going to church. Dad will take his motorcycle to work and if need be will cycle there as well. There is even a bus that runs from our house to a half a block from his employer.
I can walk to the grocery store. With two kids and a wagon we can make it through the summer. In the fall, we will wait until the President with the R comes in January.
The factory here in Indiana will be on turbo production.
It depends, if it was American oil from American
wells bringing in 150 a barrel
it might not be too bad
I second your opinion
We may have zero choice in the matter.
This isn't a supply and demand problem, fuel is available- it is our money is being devalued, and people who sell oil want more of it because they know we are printing it.. - Tom
Zer0's campaign promise was high priced oil and electricity - so $150 barrel oil is just him accomplishing his goal, and placing the blame anywhere and everywhere else.
Our family would need to re-work things and I’m guessing we would drop some frills like Direct TV and eat less meat yada.
The pups would need to give up their rawhide habit. :p
We have places we can cut but hopefully this isn’t long and drawn out because it would certainly take a toll on us.
I’m hoping for $8 gasoline just to get rid of Obunghole.
It will be a long hot summer with higher electricity rates and 8 bucks a gallon.
Of course Americans can handle whatever the price is. They are Americans not Dims. They would adjust their budgets, adjust their behavior and cut back where they had to.
The issue as you say is that this will slow the economy. Of course this problems is due to two sources:
1. The entire Dim party in the tanks for the socialist greens.
2. The GOP idiot Senators from Maine among other GOP Senators who blocked drilling in Anwar
One of Obama’s czars said that the goal was to have gas prices in America equal those in Europe.Looks like their plan is on track.
We handled it in 2008. It helped usher in President Barack Obama. What will it usher in or out this time around?
Obama is following Lenin’s saying, “The worse, the better,” (for creating the preconditions necessary for a communit coup.)
He just needs to dial it back enough to get reelected, so that he can finish the job.
B. Hussein will blame the rich people and George Bush for the price of gas. And all his brain dead, kool aid drinking supporters will moan and wail about how they can’t afford food or transportation because of the evil rich.
The hard-working taxpayer will just keep working hard, paying taxes and live a spartan life to try to keep up and pay their bills.
Right you are, Captain.
Four bucks is the threshold.
At five bucks, even another guy named Bush could get elected (not that I’m suggesting that).
After the next four years, I am very afraid we will be looking back on $5 gasoline quite fondly.
You clearly don’t understand what happens to the entire economy when Americans “adjust their budgets” and “cut back” where they have to. Those “adjustments” and “cut backs” are purchases that are not made to businesses that start to close down and lay more people off.
Meanwhile, inflation is rampant because everything gets much more expensive so we have the perfect storm of fewer people working and food and clothing and heat/cooling costing more.
This is not about “toughness” or “being able to handle it” - it’s about economic reality and no, our economy “cannot handle” 150 dollar oil - which would be probably 5 dollar gas - and it’s not got a damned thing to do with Americans versus Dims or toughness or macho.
It’s economics 101. Live it love it learn it.
The folks who are in the most trouble not only think the Dems are the ones dialed in to this, they'll vote for them in droves. I damn near give up.
what all the comments don’t understand is the dynamism of the USA system. Once the commie in chief is gone and the democonnies and rino’s are fighting to retain power, the government barriers to the exploitation of our carbon will abruptly end. The only real question is how anti-american will the new political class be.
And the sad part is that very few consumers will ever consider how this all came about. They don’t seem to understand how political acts influence gasoline prices.
Folks here clamoring for 8 bucks a gallon gas or 200 bucks bbl oil are in for a shock at how quickly this country will tail spin (and how quickly our strategic reserve is DRAINED).
Buckle up, things you hold near and dear are about to become a WHOLE lot more expensive.
I hope I’m wrong, but the question may end up being “Are Americans going to have any other choice BUT to deal with $150 oil?”
Sigh. November can’t get here soon enough.
We aren't using as much....
I work in an industry that services all types of businesses. We have been weathering the storm fairly well except for the last month, particularly the past two weeks. This is the price range in which, I believe, it all starts to break down. I don’t think we (the country) can withstand these prices very long, $5 will break us.
Obama will certainly try to blame, evil oil companies and Bush. The press will repeat it. Then if the economy is sputtering even more than now, the American people will vote him out of office.
He wants to win. He is not going to just give up. But he is going to lose the election.
“Its not just gasoline were talking about here”
Absolutely. Kerosene, diesel, LPG gas, the base chemicals for most crop pesticides/insecticides/fungicides, plastic soda bottles, road asphalt, the list goes on and on. We’re going to get hit from every angle if petroleum prices soar and stay there for any length of time.
If the price of oil keeps going up like this, soon gasoline will cost nearly as much as Governor Perry’s wonderful toll roads.
You hit it right there. Hopefully we can keep putting THAT message out “there” and try to make folks understand. “Wanting” high oil prices is gonna kill us quick.
Our Directv was gone three years ago.
Moved onto Netflix. Started watching Gaki no Tsukai from Japanese tv free on the internet Dad hooked up to the TV.
It’s not so bad. We watch lots of DVDs too. Oh and Pinterest on my computer. That site is too addictive. Tons of projects for summer. And food too. Yum.
A farmer friend of mine told me that by Christmas of 2012 we will not be worried about presents under the tree. We will be too worried about buying food for the table.
>as price goes up, global consumption will go down, and at some point, they should start losing money...
Unless, as has been suggested, it’s a result of the dollar devaluing. (i.e. Maybe the oil is staying the same real-price and our imaginary-dollars are simply being valued less.)
Comrade, you won't have $5 or gasoline to look back at. You'll be standing in a brealine with the rest of us on a cold winters day begging for your daily sustinence, just as Dear Leader Obama wants it.
at what point do they not sell enough product to start losing money???
My point exactly.
As a capitalist I want to pay whatever price supply and demand dictate. I wouldn’t mind eliminating *all* gas taxes, however.
We could handle it. It would not be fun.
The takers would bitch more than the makers they live off of.
I too have business interests that serve other businesses -we serve businesses who serve the consumer. The gas price is incredibly important in everything we do and in everything the consumer does or does not do, making it incredibly important to our direct customer businesses.
Five will kill the economy. I think the tipping point is really 3 to 3.50. I know conventional wisdom is that it is four. My point is, folks start to change their lives at 3 or 3.50 and by the time folks realize we are in heep big trouble, the price is usually 4.
I don’t think 5 could last because it is somewhat self correcting. Above 4, the demand would dry up and keep it from getting to 5 IMO. But anything above 3 is awful especially when we have the resources for it to be under 2.
And food too. Yum.
Oh no you don’t! Mylife gets the food thing started and I think it is plus five lbs from just reading the posts! ha! :)
I don’t think I would mind ditching Direct TV but the mister would be a crank-butt without his Nascar. A cranky mister is yuck.
And why would you want to, it stinks and would make your hands all black and yucky.
I live in a Chicago suburb and the nearest place where I could fill a Honda Civic GX (the CNG model) is almost 25 miles away.
>i truly believe that is part of the problem, but, $150 a barrel is not due to dollar devaluation, and consumption will go down...
>at what point do they not sell enough product to start losing money???
Well, the rest of the “world market”* is picking up, so the answer may simply be “we’ll sell it to someone else” and they won’t lose money.
(*I’m thinking Brazil, India, China in particular — Those countries are pulling their ‘lower classes’ up by providing more just [better] laws to those who would work for money.)