It's hard for me to believe that oil prices have shot up so quickly on optimism about the economy. I don't see what's changed over the past few weeks to make speculators so much more confident a recovery is underway. I concede the economy has probably bottomed. But that doesn't necessarily mean things are rapidly improving. There's still weakness in the housing market, in the real estate market, and a credit crunch, all of which will constrain growth for quite a while. I think fiscal and monetary stimulus efforts will pay off, but not soon.
In my piece Tuesday night, economist Dean Maki argued the price per gallon of gasoline doesn't really matter to consumers. It's the rate of the increases that counts.
But I don't entirely buy it. I think that when gasoline crosses the $3 threshold, for example, it has some psychological impact. I think milestones like that make people more worried about a return to $4 gasoline. That, in turn, impacts consumer confidence. Of course, I don't have data to back this hunch up. It's just my own, anecdotal experience.
I'm curious if any of you pay attention to higher energy costs? Is it something you basically grumble about -- like taxes -- but it doesn't have much impact your day to day life? Or do energy prices affect your desire and ability to purchase other things?
Comments
I agree with Erika Miller. For myself, when I am paying over $3 per gal I start to cut back two ways. First, I will not pick up a coffee when I stop for gas. I try to keep the money that I spend at the gas station within a range. Second, I will try to cut back on driving. Because I am not driving as much, there are fewer trips to the store. Because of fewer trips to the store, the impulse items that I would buy become fewer. There are probably a lot of people that that cut back in one or both ways that I do when gas goes up.
Baltic Dry Index does not look like end of depression. I don't think oil is going anywhere, not for a long time.
http://www.nakedcapitalism.com/2009/08/baltic-dry-index-down-17-for-week-worst.html
Richard,
Would you feel comfortable sharing some of your experiences? Do you fill up your car and then decide how much you can afford spend on groceries? Is it that direct? Or is it more of a mindset change-- such that you feel you need to be more frugal generally.
Thanks for posting!
Erika
Not any more. By taking advantage of Cash for Clunkers to buy a new, fuel efficient car, gas can go to $4 and I'll still be even. Now all I have to do is figure out how to come up with the $650 a month for 5 years to pay for the new car.
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The price of gas has a huge affect on all my buying decisions.