Feb

21

Gasoline Fears, from Bill Rafter

February 21, 2012 |

 This past week there was an item published about the drop in miles driven by the population. The point of the missive was to suggest that miles driven is a surrogate for economic activity, and that we should prepare for another recession because the miles driven showed a huge decline.

Part of the problem in analyzing the data is that mileage did not directly address the price of gasoline, and it is logical to assume that at a high price of gasoline, the public curtails some discretionary driving. So some of the drop in miles driven could be related to price. Another item could be the Cash for Clunkers program, which could offset the price rise to some extent as the newer cars generally get better mileage. The latter apparently did not happen to any large degree.

The chart presented with this link shows the allocation of household expenditures spent on gasoline (top panel) and the annual growth rate of those expenditures.

My conclusion: There is a drop in mileage driven, but I would not bet that it foretells further recession.

Mr. Krisrock comments: 

105 dollars in crude tonight as Obama and his communist central planners try to figure out the new narrative and who to blame this on…


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