Are we truly screwed with this latest hike in gas prices? Two articles today want to make me break out the bicycle clips. The Wall Street Journal says Why This Oil Shock is the Big One in this article.
With the price shock of 2007-08, spending on energy as a share of wage income has shot up above 6%, topping the 1974-75 and 1990-91 shocks to be the worst since the 1980-81 runup. Comparing the additional cost of energy to income growth (especially sluggish in recent years), the current shock is far worse than any of the three prior ones, Mr. Carson says.That's because everybody's paying (or not paying) off huge credit card debt, or work for peanuts, or a combination of those and other disastrous factors. Check out that graph. Yikes. Then there's the New York Sun today which also has the cheerful news that Gasoline May Soon Cost $10/gallon:
The figures “suggest that energy costs will crowd out other spending components because income growth is being stifled by weakness in payroll employment,” he writes. “Moreover, relatively thin saving flows offer consumers little cushion against the rising oil prices.”
The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years.Wheeeeeeee!! How you like your gas guzzlers now, America?
Translating this price into dollars and cents at the gas pump, one of our forecasters, the chairman of Houston-based Dune Energy, Alan Gaines, sees gas rising to $7-$8 a gallon. The other, a commodities tracker at Weiss Research in Jupiter, Fla., Sean Brodrick, projects a range of $8 to $10 a gallon.
While $7-$10 a gallon would be ground-breaking in America, these prices would not be trendsetting internationally. For example, European drivers are already shelling out $9 a gallon (which includes a $2-a-gallon tax).