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Can Americans Handle $150 Oil?
24/7 Wall Street ^ | 2-21-2012 | Douglas A. McIntyre

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.


TOPICS: News/Current Events
KEYWORDS: economy; gasoline; oil; prices
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1 posted on 02/21/2012 5:40:52 PM PST by blam
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To: blam

No, our economy will crash as a result.


2 posted on 02/21/2012 5:42:23 PM PST by C. Edmund Wright
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To: blam
I'm praying for $200/bbl oil and $6/gallon gas by November 6th for the benefit of President "Energy Prices Will Necessarily Skyrocket."

The pain would be worth it.

3 posted on 02/21/2012 5:44:31 PM PST by E. Pluribus Unum (Government is the religion of the fascists.)
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To: blam

Our family budget couldn’t handle it for any extended period of time.


4 posted on 02/21/2012 5:44:56 PM PST by Irenic
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To: blam

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.


5 posted on 02/21/2012 5:46:15 PM PST by txrefugee
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To: Irenic

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.


6 posted on 02/21/2012 5:48:30 PM PST by netmilsmom (Happiness is a choice)
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To: blam

The factory here in Indiana will be on turbo production.

http://automobiles.honda.com/civic-natural-gas/?ef_id=EzVPREYoSh4AAIqu:20120222013432:s


7 posted on 02/21/2012 5:50:02 PM PST by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: blam

It depends, if it was American oil from American
wells bringing in 150 a barrel
it might not be too bad


8 posted on 02/21/2012 5:50:13 PM PST by tet68 ( " We would not die in that man's company, that fears his fellowship to die with us...." Henry V.)
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To: E. Pluribus Unum

I second your opinion


9 posted on 02/21/2012 5:51:03 PM PST by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
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To: blam

We may have zero choice in the matter.


10 posted on 02/21/2012 5:51:43 PM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: C. Edmund Wright
I saw onFox news tonight a man say $5/gal would be a tipping point.
That is ridiculous. We already know the tipping point, and it is $4/gal/gasoline for 3 months or more.

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

11 posted on 02/21/2012 5:52:12 PM PST by Capt. Tom
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To: blam
brought on by a drop in imports of crude from Iran...

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.

12 posted on 02/21/2012 5:52:27 PM PST by C210N
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To: blam

No.


13 posted on 02/21/2012 5:53:19 PM PST by ryan71 (Dear spell check - No, I will not capitalize the "m" in moslem!)
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To: netmilsmom

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.


14 posted on 02/21/2012 5:59:57 PM PST by Irenic
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To: E. Pluribus Unum

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.


15 posted on 02/21/2012 6:05:20 PM PST by Ouderkirk (Democrats...the party of Slavery, Segregation, Sodomy, and Sedition)
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To: C. Edmund Wright

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


16 posted on 02/21/2012 6:06:46 PM PST by JLS (How to turn a recession into a depression: elect a Dem president with a big majorities in Congress)
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To: Travis McGee

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.


17 posted on 02/21/2012 6:09:48 PM PST by Farmer Dean (stop worrying about what they want to do to you,start thinking about what you want to do to them)
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To: blam

We handled it in 2008. It helped usher in President Barack Obama. What will it usher in or out this time around?


18 posted on 02/21/2012 6:12:42 PM PST by John W (Viva Cristo Rey!)
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To: Farmer Dean

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.


19 posted on 02/21/2012 6:13:57 PM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: JLS

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.


20 posted on 02/21/2012 6:13:57 PM PST by Josa
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To: Capt. Tom

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).


21 posted on 02/21/2012 6:22:14 PM PST by 2nd Bn, 11th Mar (The "p" in Democrat stands for patriotism.)
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To: blam

After the next four years, I am very afraid we will be looking back on $5 gasoline quite fondly.


22 posted on 02/21/2012 6:23:22 PM PST by Dr.Zoidberg (Warning: Sarcasm/humor is always engaged. Failure to recognize this may lead to misunderstandings.)
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To: JLS

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.


23 posted on 02/21/2012 6:25:22 PM PST by C. Edmund Wright
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To: blam
as price goes up, global consumption will go down, and at some point, they should start losing money...
24 posted on 02/21/2012 6:29:35 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: txrefugee
No one who drives or eats should vote for any Democrat candidates if this occurs.

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.

25 posted on 02/21/2012 6:30:10 PM PST by Cyber Liberty ("If the past sits in judgment on the present, the future will be lost." --Winston Churchill)
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To: blam

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.


26 posted on 02/21/2012 6:30:15 PM PST by waynesa98
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To: blam

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.


27 posted on 02/21/2012 6:32:48 PM PST by OldPossum (ou)
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People continue to think narrowly about "oil". Its not just gasoline were talking about here, that is a very small subset of the petroleum business by and large. ALL prices will go up as a result; everything. There is not too much in your house you can touch that has not been touched by a petroleum by-product at some step in its origination.

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.

28 posted on 02/21/2012 6:33:15 PM PST by Michael Barnes (Obamaa+ Downgrade)
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To: blam

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.


29 posted on 02/21/2012 6:33:39 PM PST by DemforBush (And she's buying smoked sal-monn. Ooh, and the bread is Wonder...)
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To: Capt. Tom
For the first time in years....America is a net EXPORTER of fuel.

Why?

We aren't using as much....

30 posted on 02/21/2012 6:34:51 PM PST by Osage Orange (A clear conscience is the sign of a fuzzy memory.)
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To: C. Edmund Wright

31 posted on 02/21/2012 6:38:40 PM PST by Cyber Liberty ("If the past sits in judgment on the present, the future will be lost." --Winston Churchill)
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To: C. Edmund Wright

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.


32 posted on 02/21/2012 6:39:34 PM PST by riri (Plannedopolis-look it up. It's how the elites plan for US to live.)
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To: Josa

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.


33 posted on 02/21/2012 6:40:36 PM PST by JLS (How to turn a recession into a depression: elect a Dem president with a big majorities in Congress)
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To: Michael Barnes

“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.


34 posted on 02/21/2012 6:42:37 PM PST by DemforBush (And she's buy-ing ...*smoked salmon*. Ooh, and the bread is Wonder...)
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To: blam

If the price of oil keeps going up like this, soon gasoline will cost nearly as much as Governor Perry’s wonderful toll roads.


35 posted on 02/21/2012 6:45:37 PM PST by BobL (I don't care about his past - Santorum will BRING THE FIGHT to Obama)
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To: DemforBush

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.


36 posted on 02/21/2012 6:45:49 PM PST by Michael Barnes (Obamaa+ Downgrade)
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To: Irenic

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.


37 posted on 02/21/2012 6:46:42 PM PST by netmilsmom (Happiness is a choice)
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To: txrefugee

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.


38 posted on 02/21/2012 6:47:00 PM PST by Steve Newton (And the Wolves will learn what we have shown before-We love our sheep we dogs of war. Vaughn)
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To: Chode

>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.)


39 posted on 02/21/2012 6:51:13 PM PST by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: Dr.Zoidberg
After the next four years, I am very afraid we will be looking back on $5 gasoline quite fondly.

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.

40 posted on 02/21/2012 6:57:51 PM PST by usconservative (When The Ballot Box No Longer Counts, The Ammunition Box Does. (What's In Your Ammo Box?))
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To: OneWingedShark
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???

41 posted on 02/21/2012 6:59:04 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: usconservative

My point exactly.


42 posted on 02/21/2012 7:05:07 PM PST by Dr.Zoidberg (Warning: Sarcasm/humor is always engaged. Failure to recognize this may lead to misunderstandings.)
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To: blam

As a capitalist I want to pay whatever price supply and demand dictate. I wouldn’t mind eliminating *all* gas taxes, however.


43 posted on 02/21/2012 7:07:31 PM PST by The Duke
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To: blam

We could handle it. It would not be fun.

The takers would bitch more than the makers they live off of.


44 posted on 02/21/2012 7:11:11 PM PST by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: riri

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.


45 posted on 02/21/2012 7:11:15 PM PST by C. Edmund Wright
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To: netmilsmom; mylife

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.


46 posted on 02/21/2012 7:11:15 PM PST by Irenic
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To: Secret Agent Man
We could handle it. It would not be fun.

And why would you want to, it stinks and would make your hands all black and yucky.

47 posted on 02/21/2012 7:17:57 PM PST by ROCKLOBSTER ( Celebrate Republicans Freed the Slaves Month.)
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To: nascarnation

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.


48 posted on 02/21/2012 7:23:30 PM PST by reg45 (Barack 0bama: Implementing class warfare by having no class!)
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To: ROCKLOBSTER
I specifically remembering walking into Costco in 2007 and seeing this article, which was the cover story. http://www.economist.com/node/10252015
49 posted on 02/21/2012 7:25:15 PM PST by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto.)
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To: Chode

>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.)


50 posted on 02/21/2012 7:27:03 PM PST by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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