{"id":27859,"date":"2012-03-01T11:39:16","date_gmt":"2012-03-01T16:39:16","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/01\/high-gas-prices-are-not-a-good-thing\/"},"modified":"2012-03-01T11:39:16","modified_gmt":"2012-03-01T16:39:16","slug":"high-gas-prices-are-not-a-good-thing","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/01\/high-gas-prices-are-not-a-good-thing\/","title":{"rendered":"High Gas Prices Are Not a Good Thing\u2026"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-27797\" title=\"Various media outlets seem set on convincing the American populace that high gas prices are, in fact, not so bad as we\u00e2\u0080\u0099re making them out to be.\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/why-are-gas-prices-so-high.jpg\" alt=\"Why are gas prices so high?\" width=\"600\" height=\"165\" \/><\/p>\n<p>Various media outlets seem set on convincing the American populace that high gasoline prices are, in fact, not so bad as we\u2019re making them out to be.<\/p>\n<p>Sometimes it\u2019s a geopolitical or environmental argument they recite, speculating that painful pump prices will drive consumers away from the problematic Middle East\u2019s oil reserves and into green energy outlets.<\/p>\n<p>Sometimes they bring politics into the mix, pointing to the Republican\u2019s humiliating losses in 2008 to highlight the possibility that Democrats could suffer similarly this year, thereby reversing the unpopular policies implemented over the last four years and leading to longer-term benefits.<\/p>\n<p>Meanwhile, CBS\u2019 Dan Burrows reports yet another way of looking at the situation in his February 28 article, <em>Why higher oil and gas price are good news<\/em>.<\/p>\n<p>According to his main source, Charles Schwab Chief Investment Strategist Liz Ann Sonders, \u201c\u2026 much of the increase in energy prices since their October 2011 lows can be explained by the resurgence in the global economy. To a lesser degree, the increase derives from fear about supply disruptions due to tensions in Iran and Syria.\u201d<\/p>\n<p>In other words, the reason why consumers are increasingly seeing their wallets savaged every time they fill up is that everything else in the economy is doing so well. People are getting back on their feet and going back to work, giving them money to shop and travel and go about their daily lives in pre-recession style, all activities that drive up demand for gasoline and therefore prices as well in an already tight market.<\/p>\n<p>That may very well be. In China. But the United States \u2013 not to mention other traditional consumer markets such as Europe and Japan \u2013 is a much, much sadder story.<\/p>\n<p>So that Pollyanna story doesn\u2019t fly very well here.<\/p>\n<h2><strong>Prices Are Rising Despite Low Demand<\/strong><\/h2>\n<p>Democrat strategists Stanley Greenberg, James Carville and Erica Seifert did some research on what campaign messages resonate best with the American people this <a title=\"Election Year and the Stock Market\" href=\"http:\/\/www.investmentu.com\/2012\/March\/election-year-stock-market.html\">election year<\/a>. And the results were dramatic.<\/p>\n<p>Out of four varying messages, \u201cclaiming that \u2018America is back\u2019 is by far the weakest operative message and produces disastrous results.\u201d That lack of confidence is one indication that U.S. consumers aren\u2019t contributing much to rising gasoline prices.<\/p>\n<p><em>The News Tribune<\/em> offers another look at the issue. On Monday, February 27, it showed the average regular gas price at $3.947 per gallon in Tacoma, Washington, \u201cafter posting a price increase of a cent overnight and nearly 25 cents in a week. A month ago, average <a title=\"How to Benefit From Higher Gas Prices in 2012\" href=\"http:\/\/www.investmentu.com\/2011\/December\/benefit-from-higher-gas-prices-in-2012.html\">gas prices<\/a> were more than 42 cents a gallon lower\u2026\u201d<\/p>\n<p>The article continues: \u201cThat price rise continues <a title=\"Financial Analysts: 3 Ways to Beat Their \u201cEducated Guesses\u201d\" href=\"http:\/\/www.investmentu.com\/2008\/July\/financial-analysts.html\">despite what analysts say<\/a> is a plentiful supply of fuel and a declining demand for gas.\u201d And it would be a significant hike regardless.<\/p>\n<p>A day later, Joe Petrowski, CEO of Gulf Oil, concurred on CNBC\u2019s Squawk Box. Commenting on how he expects prices \u201cto go much higher, especially on the East Coast,\u201d Petrowski added: \u201cWhat\u2019s extraordinary is demand is exceedingly weak.\u201d<\/p>\n<p>Up against that kind of insider information, Sonders\u2019 argument looks even weaker.<\/p>\n<h2><strong>A Bunch of Reasons, But One Conclusion<\/strong><\/h2>\n<p>Of course, Sonders isn\u2019t the only person to try to throw around a theory on the subject. Ask any random person on the street why gasoline prices are so high and they\u2019ll come up with any number of reasonable or random responses.<\/p>\n<p>Some common theories include:<\/p>\n<ul>\n<li>Increasing emerging market activity<\/li>\n<li>Tensions in the Middle East<\/li>\n<li>Oil market speculators<\/li>\n<li>Greedy oil companies<\/li>\n<li>Oil isn\u2019t getting any cheaper to extract<\/li>\n<li>It\u2019s all Obama and the Democrats\u2019 fault<\/li>\n<li>It\u2019s all Republicans\u2019 fault<\/li>\n<li>It\u2019s all government\u2019s fault in general<\/li>\n<\/ul>\n<p>And there\u2019s probably at least some truth to each round of the blame game. <a title=\"The Five Factors Moving Oil Prices This Year\" href=\"http:\/\/www.investmentu.com\/2012\/January\/the-five-factors-moving-oil-prices-this-year.html\">Oil prices<\/a> \u2013 and therefore the cost of gasoline \u2013 depend on a multitude of factors, most of them complicated and many of them unpopular.<\/p>\n<p>What isn\u2019t nearly so complicated, however, is the fact that current pump rates are anything but good for consumers.<\/p>\n<p>The United States is already on <a title=\"Is the Global Economy Heading for Another \u201cLost Decade?\u201d\" href=\"http:\/\/www.investmentu.com\/2011\/November\/global-economy-lost-decade.html\">shaky economic footing<\/a>, with significant numbers of citizens still out of work from the recession. Since businesses and individuals alike <a title=\"How America Can Escape From Oil\u2019s Stranglehold\" href=\"http:\/\/www.investmentu.com\/2010\/June\/oils-stranglehold-over-america.html\">rely on gasoline<\/a> to fuel a whole host of activities, they operate best when they can actually afford to get from Point A to Point B.<\/p>\n<p>Not to mentioned the heightened costs and prices for every single good that needs to be transported\u2026Yeah, that\u2019s just about everything\u2026<\/p>\n<p>It\u2019s as simple as that. And there\u2019s really no pretty way to spin it.<\/p>\n<p>Good Investing,<\/p>\n<p>Jeannette Di Louie<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=liDA1oAKCL8:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=liDA1oAKCL8:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=liDA1oAKCL8:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=liDA1oAKCL8:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=liDA1oAKCL8:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=liDA1oAKCL8:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=liDA1oAKCL8:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=liDA1oAKCL8:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/liDA1oAKCL8\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Various media outlets seem set on convincing the American populace that high gasoline prices are, in fact, not so bad as we\u2019re making them out to be. Sometimes it\u2019s a geopolitical or environmental argument they recite, speculating that painful pump prices will drive consumers away from the problematic Middle East\u2019s oil reserves and into green &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/01\/high-gas-prices-are-not-a-good-thing\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;High Gas Prices Are Not a Good Thing\u2026&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-27859","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/27859","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=27859"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/27859\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=27859"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=27859"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=27859"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}