Monday, February 20, 2012

Got Gas?

Over on Power Line there's a discussion of the relation between gasoline prices and presidential popularity. The accompanying graph rather suggests a correlation
although you can see where other events overtook the effect such as the beginning of the Reagan economic boom, the effect of Bush I's breaking his "no new taxes" pledge, and the Bush II reaction to 9/11. A somewhat more rigorous analysis here suggests that while a president may well be held responsible for rising gas prices, bringing them down is of limited value. Current predictions of gas in the upper $4 range for the summer and possibly into the $5's in high tax locations like California do not bode well for the current administration.

More interesting in my mind is the second graph on Power Line that shows demand for gasoline has fallen to about 60% of what it was as late as 2007. I realize that a lot of people have purchased Prius's since '07, but they would have to represent about half the traffic on the roads to have that big an effect. I can think of several factors that could contribute to a 40% drop in gasoline consumption, but nothing that accounts for the bulk of it.


Oakenheart said...

I go only where I have to. Sold the boat, motorcycle, and can't afford to drive unless it's totally necessary. I'd imagine that the lower income folks are all in the same position, can't afford it. People look at the situation too simply too. Take a look at this:

in the last 10 years, the dollar has lost 50% of it's purchasing power. Salaries have not changed, but the cost of goods sure has. This has a huge effect on gas prices, since oil is bought and sold with dollars. When the .gov and Fed print the hell out of money, devaluation of the currency is inevitable. Add in Iran, and production cuts by OPEC, along with Obama's moratorium in the gulf and blocking Keystone, and you get this shit.

Robin said...

Gasoline consumption is at an astounding low quantity lately. Probably about 40% off the peak about 5 or 6 years ago. That's a sign that the recession continues.