Were High Gas Prices the straw that broke the back of the American Economy?

On top of the mounting War Debt and massive defecit spending, the massive increase in fuel costs what ate up America's extra spending money leading to the collapse of our house of cards?

Okay, the Housing Bubble was bad enough but for a long long time Americans have been living hand to mouth and running up debt, and a sky-high fuel bill Im sure put a huge dent in millions of household budgets.

Any thoughts on almost tripled fuel prices influencing the Economic collapse?

It certanly was instrumental in the collapse of Ford and GM. Companies who thrived selling not so fuel efficient vehicles to the american public.

what gets me mad is that now that gas is down below 2.50 people seem to be happy about the price. the oil companies have us trained to 2 to 3 dollar a gallon gas.

Yeah. Magically.

I was paying 5.25/gal for diesel less tahn 6 months ago. Pretty fishy, eh?

I want free gas, who cares about Health care, give me free petrol !

I agree....I only partially buy that China and other global markets are to blame for demand and price gouging..

My question is how much can our goverment regulate the oil companies...if we cut in to their bloated ass profits...do we hurt ourselves economically?

Perhaps one of you learned chaps can enlighten us as to how supply and demand in global markets affect prices?

Paid $1.95/gal in Idaho the other day.

Definitely agree with you on this one. The housing market had a very bad effect on a lot of people/households. The fuel prices effected almost everyone. I have said before that the American people have the shortest memory of any nation. hey put the price of gas up by a dollar then drop it back by .75 cents and everyone says, "I found cheap gas today". What a bunch of sheep.

Yup it raised the price of everything and anything. In other words it caused rapid inflation.

"Paid $1.95/gal in Idaho the other day."
This is another thing that bothers me. The refineries are here yet Idaho pays less.

that irritates me too. oil goes up $10 a barrell, gas goes up .30 a gallon. oil drops 20 a barrel, gas decreases by about .03.

i shoulda took economics. i work in the printing industry and for some reason, despite printing jobs getting fewer, the cost of materials(paper and ink) have skyrocketed in the last 2 years. don't prices generally drop when the demand is waning?

Well doesn't paper come from pulp?

That would mean the cost to produce paper has gone up since fuel prices are up. Almost every piece of logging equipment used to harvest the wood made into pulp runs on diesel.

Sounds like your problems stem from the supply side of the equation.

"Compare the difference in state tax."

We are 12.5 cents a gallon higher. So where can I buy gas around here for $2.075? I am way closer to a refinery than Idaho is.

Speaking of which - how is the "supply" looking based on this year's harvest? I can't find any figures in my Wall Street Journal crop reports!

For some background reading:

http://www.npr.org/templates/story/story.php?storyId=5365439

Are you implying that people were running up debt to pay for necessities? I think that's a rare scenario. The debts went to boats, trucks, stereos, ATVs, motorcycles, etc. That's not hand to mouth. From time to time I hear people bitching about how hard it is to make ends meet, how tough it is to pay the mortgage and put food on the table. So far, all those people have payments for a brand new truck and a harley in the garage. And you better believe they have the latest electronics from cell phones to ipods.

The oil companies and refiners buy or sell their oil at todays rate. If the market rate of oil is going up, they also raise the price of current inventories. Retailers and wholesalers do the same thing in all kinds of products. They have to pass along the increased costs in a timely manner to allow the downstream market to catch up. Its as simple as, Todd getting a shipment of spoons. Metals went up this summer and then began a decline after the olympics (china shut down their steel plants for cleaner air) If the spoons arrived and the price was higher, Todd would lose money and probably get irritated with his supplier for surprising him. But the fact that cost of the spoons went up, regardless of prior knowledge, Todd would or should also tell his customers, that a price increase is coming on their next order. He would also increase the price of current inventory as it ships out. The reason is, he is going to invest more money in his next purchase of raw materials. Its also a reason why companies dont carry a lot of inventory when prices go up dramatically for steel or lumber. When prices fall like they are for oil, gasoline inventories already purchased as a higher price, cannot be reduced because the gross profit margin will be affected. There are a few fuel suppliers who buy on the spot market, they are limited inventory, so as the price drops, they can stay competitive. Its almost impossible not to lose a little profit when prices are dropping.

Steel salvage yards were paying up to 500 per ton of good steel. If they sit on the new inventory , the price could go down and they would lose money on product they already bought. Right now good steel is worth less than 50 dollars a ton at the scrap yard.

Price differentiation between states as well as competitors is a function of volume purchasing, total overhead, competition in town, and buying power of the customer. We pay more in seatte-tacoma because along with property values, the customer has more money than folks in communities like Forks or yakima.

I posted about the high gas prices earlier this year. Aunty M posted a response that basically said to stop whining about high gas prices. I spent $4.50 a gallon on two summer steelhead trips to Oregon, about $90/tank each way. Now I'm spending half that about $45/tank. I've been able to split the cost for my trips out to Forks this fall. I'm going with a buddy one day next week and maybe around T-Day. Taking the bus to and from work saves me a tank every two weeks and 300 miles.

I agree with you Irie that the rise in gas prices was the straw that broke the camel's back. I also believe that the earlier rises in real estate contributed to inflation and broke the bubble. I think the government underestimates inflation. Go to the store and see how much food and beverages have increased. Grocery prices seem to still be high and probably will only go down if fuel prices do not creep back up.

I thought steel prices went up early in this mess too...

I wonder what all those people are thinking who bought a Jeep so they could get $3.00 a gallon gas for three years.