"Never wise up a chump:–W.C. Fields
Today almost every paper carries a headline about gas prices falling $.15 in the last two weeks. Regular petrol is down to $3.75. Americans can take to the road in hordes.
The trouble is that $3.75 gas will still swamp most drivers and oil does not seem to want to drop much below $120. That means that fuel prices are not likely to keep falling.
On a scale of 1 to 10, a $4 gallon of gas was as close to a 10 as prices have been in decades. At $3.75 it is still an 8 or 9.
It may be hard to remember, but gas was under $2 in several parts of the country as recently as early 2007. Driving, running an airline, or transporting goods was affordable then and the economy was not under pressure from fuel prices.
Gas at $3.75 is about to be married with extremely high home heating oil prices, which, by the estimate of the federal government will be up 31% this winter compared to last.
Paired together, gas and heating oil prices will mean the consumer will pay more for energy later this year than he has at any time in recent history. The modest drop in gas prices means very little.
This will be a cruel winter. Mortgage and credit cards rates are still high. Wages are barely rising. Home prices are still moving down rapidly.
The lower price of gas is simply a mirage in a desert that is getting more dry by the month.
Douglas A. McIntyre
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