Gas Prices key to avoiding 2007 Recession

[Swing low, sweet chariot. Comin' for to carry me home.]

The US Economy desperately needs gas prices to come down if it is to avoid recession in 2007.  In order to lower inflation in a big way, influence consumer sentiment and ensure the Fed doesn’t raise interest rates again, the price needs to drop below $2.30/gallon. 

Such prices will be here by mid to late September, based on today’s wholesale price of gas.  But to keep it at those levels, we can’t have any hurricanes shutting-in production in the Gulf of Mexico and we can’t have another flare-up in the Middle East.

The economy needs some good news on inflation so that we can absorb the broad slowdown.

But, my advice to fellow posters is not to make any big purchases in the near future.

[RJ]

The US Economy desperately needs gas prices to come down if it is to avoid recession in 2007. 

Interesting how gas prices and interest rates are coming down just in time for campaign 2006.

In order to lower inflation in a big way, influence consumer sentiment and ensure the Fed doesn’t raise interest rates again, the price needs to drop below $2.30/gallon. 

On a more serious note, inflation is not indicative of the price of gas rising. It is more related to the fact that the value of the dollar is falling. The rate at which gas has risen over the last few years is far higher than inflation.

[Swing low, sweet chariot. Comin' for to carry me home.]

The US Economy desperately needs gas prices to come down if it is to avoid recession in 2007. 

Interesting how gas prices and interest rates are coming down just in time for campaign 2006.

Both are controlled by the market, not the pols.  Gas prices usually trend lower after the driving season.

[Moooooo]

Big news from the Gulf today too.

[Swing low, sweet chariot. Comin' for to carry me home.]

Big news from the Gulf today too.

I don't know why the Dems and Reps can't compromise and attack both the demand and supply side of the equation:  drill, drill, drill...and conserve, conserve, conserve

[RJ]

The US Economy desperately needs gas prices to come down if it is to avoid recession in 2007. 

Interesting how gas prices and interest rates are coming down just in time for campaign 2006.

Both are controlled by the market, not the pols.  Gas prices usually trend lower after the driving season.

I know that. It's just that every time there's an election, interest rates in particular seem to freeze or occasionally lower during the campaign season no matter who's in power. I won't comment on the price of gas as of now.

Big news from the Gulf today too.

I don't know why the Dems and Reps can't compromise and attack both the demand and supply side of the equation:  drill, drill, drill...and conserve, conserve, conserve

You just said the magic words. The way to balance a budget is to spend less or put more into it(raise taxes). No one wants to do either of those things. The way to get things done is hard work and dedication. No one wants to do either of those things, either. Drill for and conserve energy. No one wants to do either of those things.

People sure don't like the consequences of not doing those things, but everyone abhors the thought of doing those things.

[opebo]

It is certainly true that the US dollar has collapsed recently.  I'm only getting about 37 baht to the dollar, and that's with an ongoing political crisis here!

[Nym90]

Big news from the Gulf today too.

I don't know why the Dems and Reps can't compromise and attack both the demand and supply side of the equation:  drill, drill, drill...and conserve, conserve, conserve

Well, business interests, especially those in oil, have no interest in conservation, and business of course pretty much runs the leadership and agenda of the GOP. I'm not saying that environmentalists on the Democratic side haven't played a part as well, but in the long term drilling is not the answer, only alternative energy is, so it makes sense to be wary of new drilling unless it can be shown to be pretty much 100 percent risk free.

[MODU]

I think jmfcst's short analysis is a bit of an overstatement.  High gas prices do effect the economy as well as spending power of the customers, but both the economy and the customer adapt.  As far as the interest rates go, those primarily track along existing and near-term projected economic conditions, so their effect is limited.  If the FED just went about changing the interest rates at whim, then you could see them causing a recession.  Fortunately the tool is only used after indepth analysis. 

[ATFFL]

It is certainly true that the US dollar has collapsed recently.  I'm only getting about 37 baht to the dollar, and that's with an ongoing political crisis here!

It makes no sense either.  The FOREX markets have gone all higgedly-piggedly.  When the US raises interest rates, which should bring foreign investment into the currency and strengthen it, it drops.  As the deficit decreases, it drops.  As the trade deficit narrows, it weakens.

All three of these defy conventional logic.

[Swing low, sweet chariot. Comin' for to carry me home.]

Well, business interests, especially those in oil, have no interest in conservation, and business of course pretty much runs the leadership and agenda of the GOP. I'm not saying that environmentalists on the Democratic side haven't played a part as well, but in the long term drilling is not the answer, only alternative energy is, so it makes sense to be wary of new drilling unless it can be shown to be pretty much 100 percent risk free.

Why not make the choice to do all three?:  drill (limit supply risk in the as-is process), conserve (limit demand risk in the as-is process), invest in alternatives (the to-be process)

We could mandate 40 MPG by 2015, drill like there is no tomorrow, and invest in alternative technology...all at the same time.

[Swing low, sweet chariot. Comin' for to carry me home.]

I think jmfcst's short analysis is a bit of an overstatement.  High gas prices do effect the economy as well as spending power of the customers, but both the economy and the customer adapt.  As far as the interest rates go, those primarily track along existing and near-term projected economic conditions, so their effect is limited.  If the FED just went about changing the interest rates at whim, then you could see them causing a recession.  Fortunately the tool is only used after indepth analysis. 

yeah, and their analysis was "indepth" when Greenspan was raising interest rates in June 2000, right when businesses cut their spending plans. 

The FED is always reactionary and usually over-reacts.

[Tender Branson]

Would not be good for the EU economy if the US enters a recession in 2007, when our economy is now finally gaining some momentum.

[Swing low, sweet chariot. Comin' for to carry me home.]

Would not be good for the EU economy if the US enters a recession in 2007, when our economy is now finally gaining some momentum.

Actually, one of the inflationary problems is that most, if not all, of the major economies are growing at the same time.  Europe is now growing faster than the US, and even Japan is coming back to life.  That is why commodity prices have gone through the roof.

[Conan]

You can't drill your way to energy independence. Oh, and the dollar is almost worth the Canadian dollar now. Its on a fast track to worthless.

[Swing low, sweet chariot. Comin' for to carry me home.]

You can't drill your way to energy independence.

I guess you missed the part about conservation and investing in alternative energy.

That's the problem with you Dims, you want to shut-down the as-is process in the hope of a to-be process that isn't here yet.

[Tender Branson]

Would not be good for the EU economy if the US enters a recession in 2007, when our economy is now finally gaining some momentum.

Actually, one of the inflationary problems is that most, if not all, of the major economies are growing at the same time.  Europe is now growing faster than the US, and even Japan is coming back to life.  That is why commodity prices have gone through the roof.

Nono, Europe is not growing faster than the US It was just this way in the second quarter of this year. When you look at the year-over-year change, you'll see that Germany, France have about 2% growth in 2006, the UK just above 2% and Italy around 1,5% while the US is growing at 3,6% this year. Because they are the main economic powers and lightweights like Latvia with 11% growth don´t account for much of the growth, it´ll be likely that the EU-growth for 2006 will be around 2,5%. Japan also might achieve close to 3% this year.

[Swing low, sweet chariot. Comin' for to carry me home.]

Nono, Europe is not growing faster than the US It was just this way in the second quarter of this year. When you look at the year-over-year change, you'll see that ...

True, but the timing wasn't good.  The IMF expects the world economy to grow by 5% this year, also not good at a time of increased inflation.

High gas prices are calculated to cost the US 1% GDP growth over the last year.  We are going to need to regain that momentum to avert a recession.

"Soft landings" are very hard to pull-off, and practically impossible during times of high fuel costs.

The economy is facing many headwinds (higher interest rates, high consumer debt, decreased construction spending).  We need relief at the pump to maintain airspeed.

[Conan]

You can't drill your way to energy independence.

I guess you missed the part about conservation and investing in alternative energy.

That's the problem with you Dims, you want to shut-down the as-is process in the hope of a to-be process that isn't here yet.

The problem with republicans is you cant advocate for two things that are contradictory to each other. You cant do both.

[Swing low, sweet chariot. Comin' for to carry me home.]

The problem with republicans is you cant advocate for two things that are contradictory to each other. You cant do both.

Dude, I deal day-in and day-out with maintaining as-is processes while ramping up to-be processes.  It can and is done on a daily basis in the business world.

There is no logistical reason why we can't open up drilling AND invest in alternative energy AND mandate much higher MPG, all at the same time.

How much does it cost the government to raise MPG standards?

Opening up drilling actually  generates revenue and could be used to pay for investments in alternative energy.  The people working the drilling rigs are NOT the same people doing research into alternative energy.

We have the resources to moderate our short to mid-term risks while investing in a long-term solution.

[Conan]

The problem with republicans is you cant advocate for two things that are contradictory to each other. You cant do both.

Dude, I deal day-in and day-out with maintaining as-is processes while ramping up to-be processes.  It can and is done on a daily basis in the business world.

There is no logistical reason why we can't open up drilling AND invest in alternative energy AND mandate much higher MPG, all at the same time.

How much does it cost the government to raise MPG standards?

Opening up drilling actually  generates revenue and could be used to pay for investments in alternative energy.  The people working the drilling rigs are NOT the same people doing research into alternative energy.

We have the resources to moderate our short to mid-term risks while investing in a long-term solution.

Nope thats not how it works and I am not going to teach economics and politics.

[Swing low, sweet chariot. Comin' for to carry me home.]

The problem with republicans is you cant advocate for two things that are contradictory to each other. You cant do both.

Dude, I deal day-in and day-out with maintaining as-is processes while ramping up to-be processes.  It can and is done on a daily basis in the business world.

There is no logistical reason why we can't open up drilling AND invest in alternative energy AND mandate much higher MPG, all at the same time.

How much does it cost the government to raise MPG standards?

Opening up drilling actually  generates revenue and could be used to pay for investments in alternative energy.  The people working the drilling rigs are NOT the same people doing research into alternative energy.

We have the resources to moderate our short to mid-term risks while investing in a long-term solution.

Nope thats not how it works and I am not going to teach economics and politics.

Nor can you name a reason why we can't let the drilling companies drill while investing in alternative resources and while mandating higher MPG standards.

[Conan]

The problem with republicans is you cant advocate for two things that are contradictory to each other. You cant do both.

Dude, I deal day-in and day-out with maintaining as-is processes while ramping up to-be processes.  It can and is done on a daily basis in the business world.

There is no logistical reason why we can't open up drilling AND invest in alternative energy AND mandate much higher MPG, all at the same time.

How much does it cost the government to raise MPG standards?

Opening up drilling actually  generates revenue and could be used to pay for investments in alternative energy.  The people working the drilling rigs are NOT the same people doing research into alternative energy.

We have the resources to moderate our short to mid-term risks while investing in a long-term solution.

Nope thats not how it works and I am not going to teach economics and politics.

Nor can you name a reason why we can't let the drilling companies drill while investing in alternative resources and while mandating higher MPG standards.

I can name a reason, I just didnt have to. For example, I dont want to see oil rigs off the beach and i dont want them to contaminate my beach. There are other environmental reasons too. Also, you cant legislate for oil companies to invest in alternative resources and the government wont do it unless theres demand or a need for it when there wont be because your doing more drilling. You try to beat the system.

[Swing low, sweet chariot. Comin' for to carry me home.]

Nor can you name a reason why we can't let the drilling companies drill while investing in alternative resources and while mandating higher MPG standards.

I can name a reason, I just didnt have to. For example, I dont want to see oil rigs off the beach and i dont want them to contaminate my beach. There are other environmental reasons too.

That is NOT a logistical reason.  So, again, there is no logistical reason why we can’t open up drilling while investing in new technologies.

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Also, you cant legislate for oil companies to invest in alternative resources and the government wont do it unless theres demand or a need for it when there wont be because your doing more drilling. You try to beat the system.

Dude, if you’re looking to the oil companies to wean us off of oil, they you’re going to waiting a very long time.

[Conan]

Nor can you name a reason why we can't let the drilling companies drill while investing in alternative resources and while mandating higher MPG standards.

I can name a reason, I just didnt have to. For example, I dont want to see oil rigs off the beach and i dont want them to contaminate my beach. There are other environmental reasons too.

That is NOT a logistical reason.  So, again, there is no logistical reason why we can’t open up drilling while investing in new technologies.

---

Also, you cant legislate for oil companies to invest in alternative resources and the government wont do it unless theres demand or a need for it when there wont be because your doing more drilling. You try to beat the system.

Dude, if you’re looking to the oil companies to wean us off of oil, they you’re going to waiting a very long time.

Thats what you were advocating.
Obviously you know nothing about economics, politics, or demand.