Gather around, boys and girls, for another quick lesson in real-world Nugenomics 101. Not “if” but “when”gas prices soar to four bucks a gallon this summer, the impact to our economy will be thunderous.
With the national average price for a gallon of gas already at $3.65 a gallon, our anemic economy already is being battered. Prices for food are already high and going higher. No tax on the poor – right, President Obama?
America’s economy is intrinsically aligned with fuel prices because the lifeblood of our economy is oil. Four-dollar-a-gallon gas will not just sting at the pump but also will put the squeeze on every American for milk and cookies at the grocery store and every product we purchase because they are all delivered to stores by truck.
For the millions of Americans who jostle for position during rush hour each day, higher gas prices mean fewer dollars to invest or spend on other things, such as going on a summer fishing trip.
As gas prices continue to rise, consumer debt probably also will rise as American families, already strapped for cash, will use credit cards to pay for the increased fuel costs.
Ultimately, higher gas prices put the squeeze on all things related to the economy, including job creation.
Interestingly, demand for gas in America is down. Typically, when demand for something such as gas is down, prices fall. But not now. Prices at the pump continue to rise.
Whatever you do, do not blame Big Oil for the price at the pump, as Bill O’Reilly mistakenly does. The oil companies have nothing to do with setting the price of gas. Gas prices are set by oil price futures, which are the prices fuel investors think oil will cost in the future.
There are other things in play besides oil futures that are causing the price to rise. Demand for oil around the world is going up as other nations are using more of it. The higher the demand, the higher the price.
Another reason oil prices are high is the deterioration in the value of the U.S. dollar. Our
dollar is the denomination used around the world for oil. Because of our gluttonous borrowing and spending in Washington and the berserk level of our national debt, the value of the once-mighty dollar has plummeted on the international market in recent years. A declining dollar causes oil prices to rise. Getting our fiscal house in order would do much to restore confidence in the dollar’s value and cause oil prices to fall.
Remember this: The stock market hates volatility. With Israel threatening to demolish Iran’s nuclear facilities in the near future before Iran can make good on its threat to incinerate the Jewish state, oil speculators are nervous and obviously think that bombing Iran will create massive international volatility. This is causing speculators to “bet” that oil production and the transportation of oil out of the Middle East will be reduced, thereby causing oil futures prices to rise today.
At four bucks a gallon or even higher, the economy will enter a severe stall. At this price, Americans will further tighten their belts on driving and spending, thereby driving demand for gas even lower than what it already is. But tightening our belts and reducing spending will slam the brakes on our economy, which is, at best, only in first gear.
Class dismissed.
Ted Nugent is an American rock ‘n’ roll, sporting and political activist icon. He is the author of “Ted, White, and Blue: The Nugent Manifesto” and “God, Guns, & Rock ‘N’ Roll” (Regnery Publishing).
W2,
Ted meant to say in that 3rd para, “…put the squeeze on every American for BACON, milk and cookies…”
O&U, Bklyn…
Don’t forget the taxes we pay on gas, which also impacts the costs of goods. As the price of gas goes up, the amount of taxes included in the gas price has gone up as well. We get focused on the cost that it is easy to forget that the government gets a share of what we are paying.
Exactly. An article here showing the first gas tax.
http://biggovernment.com/publius/2012/02/25/saturday-open-thread-gas-edition/
For Geithner, math is hard
posted at 11:30 am on February 25, 2012 by Jazz Shaw
Ed has already begun the process of digging into the President’s new tax plan, but as time goes by even more interesting tidbits emerge. One of the more unintentionally amusing ones comes to us from Tim Geithner himself, writing at the Wall Street Journal. In this detailed, fact-driven piece, Geithner points out how terribly unfair it is for U.S. energy companies to get away with paying such low taxes while raking in massive profits and living large on government subsidies.
“The effective tax rate on the energy industry in the United States today is much, much lower than the average. It’s lower because the tax code provides a substantial amount of subsidies to those private companies. We propose, for lots of reasons, mostly because we think it’s fair and more efficient, to dial some of those back.”
My, my… that does sound like a problem. Somebody should look into this at once. I mean, I don’t want to see the energy companies getting over-taxed, but they need to kick in a little something if they’re turning a profit. There’s just one problem with this complaint, though. Forbes has been tracking which companies are paying how much in taxes for some time now. Guess who actually pays the most?
America’s three biggest oil companies, ExxonMobil, Chevron and ConocoPhillips , all endure income tax burdens of more than 40%–higher than the statutory U.S. rate of 35%. Exxon, with a 45% rate, tallied $21.6 billion in worldwide income taxes for 2010.
What did some companies in other industries pay?
* Wal-Mart – $7.1 billion (at a rate of 32.4%) in income taxes
* Hewlett-Packard – a 21% rate
* Google – a 20% tax rate for 2010
* General Electric – $1.05 billion taxes on income of $14.2 billion, a tax rate of 7.4%.
Now tell me again how the energy companies are the ones getting off cheaply and requiring the attention of the tax man? We shouldn’t be too hard on Mr. Geithner, though. Math is hard.