Fuel and the U.S. military. (page 1 )
Is Texas a net importer of oil? (page 2 )
Mercedes new electric bike. (page 3 )
Gasoline comparison 2006 2008 2011
Gasoline consumption in the U.S. is down 3% from the 9.3 million barrel per day averages seen during the pre-recession halcyon days of 2006-07. However the U.S. economy is paying a 33.5% higher total price even though it is consuming less fuel.
The graph below illustrates why this is true. The price of gasoline so far this year is averaging well above even the price spike year of 2008 and we all know how well that all turned out. 2011 is on track to be the most expensive year for American gasoline consumers in history.
In 2006 the average daily gasoline tab came to $1.021 billion per day based on an average price of $2.62/g and 9.3 million barrels per day (remember 42 gallons/barrel). In 2011 so far average consumption is down to 9.0 million barrels per day but the average price per gallon is $3.61/g up $0.99/g. The result is an average daily gasoline fuel bill for the American consumer of $1.365 billion cutting spending on other goods by $344 million per day.
Why is it therefore a surprise that the economy is under continued pressure and so much of the stimulus spending seems to have come to nothing? Some simple multiplication reveals a tax on the economy of $125.5 billion over the course of the year if prices and volumes do not change significantly.
The scenario now playing is should be expected in a Peak Oil world. Volumes will trend down yet the cost will continue to escalate demanding ever increasing amounts of spending. Initially this will be experienced by lower income and rural households. Over time however it will creep up into middle income households with the large inelastic fuel consumption required by the lifestyle and living arrangement choices they have locked in long-term. Adaptation to this trend will be painful and slow for many but it will not be an option.
Add to this the even more severe moves in diesel fuel and jet fuel over the same period and it doesn’t take a MBA to understand that transportation energy costs corrosively eating into the economy. However it is unlikely that this will be on the top of any political agendas, it requires too much arithmetic.