It is costing the average driver almost $1100 more in 2012 to run their car than it did at the end of 2007. Median incomes have stayed rather flat, when adjusted for inflation. When you add to it fee increases, taxes and inflation, our average driver has a lower disposable income than at the end of 2007. What that means is for example he no longer can afford things like a new car, high end appliances, and even my industry's mattresses. These hard line goods are generally the engine of our economy. The average age of a car on our roads has risen to over 10 years, the highest since 1995. GM and Chrysler filed bankruptcy. Auto workers are out of work. Appliance sales have decreased in 2011 by up to 21%, depending on the appliance. TV sales are down from the peak in 2010. All these manufacturers and those selling the products need less employees, and less selling space. With the increase in the price of gas, oil companies employment has stayed stable. The jobs lost in retail and manufacturing are not showing up in oil production. $1100 would buy a really nice TV, or perhaps a new washer and dyer set. Multiply this by the number of households in the country and it is easy to see why our economy is stagnant.
Our political system seems to prefer pushing solar, wind and other 'green' technologies rather than concentrate on the existing technologies that drive the economy. And that is not to say green technology is bad, it is proper to encourage it. However, oil leases are down in the Gulf of Mexico. Demand on a global basis is up, which is why gas prices have gone higher. The Chinese, Indians, and Brazilians are all using more oil. Oil prices are primarily supply and demand. If our economy does improve, those prices will increase more, making it harder to sustain the improvement.
When the economy is under performing, there are certain good things that become too expensive to do, and if we do them, it drives up the deficit. Things like the social safety nets, education, or infrastructure improvement are simply more expensive as a percent of taxes collected. We could raise taxes, but that would exasperate the problem and the economy would sink more.
How can we reduce oil prices, and then gas prices? The best and proven way is to increase the supply of oil. OPEC resists that, they like the price to remain high. There are several oil rich countries like the US and Russia, that if we worked together to up our supplies, might have an impact on overall prices. We seem to not want to up our supply, and we are suffering a bad economy because of it.
The US national election is just 2 months away, will it hinge on the economy? Or will it hinge on Social Justice. If we base our vote on economics, then maybe we can eventually do both. If we vote on social justice, the economy will continue to lag, making social justice items more and more expensive.
In the early 1980's I worked for a company called F.W. Woolworth, that company was founded in 1874 and for generations it was near the top in retailing, much like Walmart today. They had a division of big box discount stores. They borrowed money to expand, then had to borrow more to maintain. Finally the banks said no more money. That day will someday come to our government, unless we get our economic house in order. If that day does come the poor and minorities will be hit bad, to the point that you might see social upheaval or even revolution. Our credit rating has already dropped, the problems cannot be fixed overnight, we cannot put off finding the solution.
But by drilling here we will put people to work, drive the economy, and make us less depended on people who could care less if we survive as a nation. Drilling will enable workers and consumers to have more expendable income further driving the economy. And a growing economy usually increases the amount of taxes collected by government, helping to stabilize the social safety nets.
No comments:
Post a Comment