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Tuesday, December 9, 2014

A Current Genuine Positive to the US Economy

As poor a President as Obama is, and overall he is really a disappointment especially to those with sincere Democrat principles and convictions, there is a chance when his term is over in 2 years, he may actually looked upon by many people as improving the economy..

And that's even with actually doing genuinely little to nothing to help it along or improve the lives of everyday people.

How so?

One word..    gasoline.
Prices have declined by 50 cents per gallon from December, 2013 and by $1 - or more than 28 percent - from the spring 2014 high.

Here's some simple math to show how much money people are saving this holiday season pumping gas vs eight months ago..   We'll do this based on a yearly average..

A person fills up their vehicle with 15 gallons of gas weekly..  How much would they pay for an entire year if the price now vs in the spring was a constant price?

Well we said the differential between then and now is $1 less so that would be a $15 savings every visit to the gas station..  Over 52 weeks, that adds up to $780 savings per driver on average based on this simple math example
Add those figures nationally and its increasing US household spending power by over $70 billion to use on other things like paying down debt, travel, buying things and even dare we say it.. saving for the future.

This will ultimately create a 0.5 to 1 percentage point of additional growth to the Gross Domestic Product (GDP) which Obama will surely get credit for..

And when gas prices go down, even though the adjustment period is much lengthier than a spike in price, it means products and services like food either go down, or stay at present level for longer periods to withstand inflationary spikes.

Of course no President has anything to do with an drop in oil prices..  He, whoever 'he' is just gets the credit in the minds of the common folk which we suppose is kinda fair since he usually gets blamed for economic problems a President has little to no control over..
The real reason gas is so cheap right now relative to where it was is due to simple basic Economics 101 supply and demand...

Fracking has led to a surge in U.S. energy production.  Oil output has increased about 80% in the last five years, reducing our dependence on foreign oil to a 45-year low.

At the same time, the Organization of Petroleum Exporting Countries (OPEC) has maintained its production levels while non-OPEC nations are increasing theirs while slowing European and Chinese economies are restraining demand.

And when supply exceeds demand, prices fall.

Humorously, many financial news sites treat this as a negative..  They say it hurts the profit margins of oil companies and discourages the motivation to hunt for and drill new wells, and people ultimately get laid off, etc..

Boo Bleeping Hoo!

To the financial news media, 'good' is when oil is spiking based on trader hornets artificially inflating the price based on speculation and rumor which in turns means soulless profiteers excited to watch and read financial news, and the commercials of course..
So as bad a President as Obama has been in our opinion, if he ends up getting credit and a popularity spike off the lower gas prices then so be it..

For a personal savings of $15 or more a week, the President can receive all the plaudits with passionate cheer from the people..

Even if they are mostly undeserved.