Friday, September 30, 2011

How gas and Oil sucked the life out of the Economy: Occupy the CFTC

In all of the discussions I've heard, read, or had since the U.S. economic woes began, I am completely confused as to why Americans seem to just roll over and quietly deal with ridiculously expensive fuel costs and ignore the ramifications of these obscenely high gas prices.  I have rarely heard anyone discuss fuel and food costs and their role in our country's financial misery. Sure you do hear that the costs of both are higher and life is more difficult as a result, but there's a lot more to this story.
 I would suggest that the U.S. economic woes wouldn't be nearly as bad if not for the unnecessarily high prices in food and energy. I would suggest that fewer people would have lost their jobs, their homes, and their dignity if not for the artificially and unnecessarily inflated gas costs. 

Some quick research show the following numbers:

GASOLINE
  The U.S. consumes  approximately 140 billion gallons of gasoline per year. At an average increase of $1.26 more per gallon over 2004 prices ($1.81 according to DOE). Over the 6 years from 2004 to 2010 that equals $1.058 Trillion dollars EXTRA spent on gasoline. Well this money had to be diverted from somewhere. This money was likely taken away from consumption of goods, away from clothing, away from electronics, away from automobile purchases, away from mortgage payments, away from education, etc. 
Can you imagine how many jobs are lost as a result of an extra 1 trillion dollars coming out of the economy to fuel your car?

DIESEL
Diesel fuel cost $2.55 in 2009 and increased to $3.68 (avg in 2011) increase of $1.13 per gallon with an annual a usage of 64.32 billion = $72.7 billion dollars out of the economy in 2011 alone. You think that might take the wind out of any recovery sail?
An estimated $72 BILLION DOLLARS in 2011
Can you imagine how many jobs are lost as a result of an extra 72 billion dollars coming out of the economy to fuel your car?

HOME HEATING OIL
Home heating oil consumption is 7.2 billion gallons a year.The price jumped to over $4 a gallon in 2008 with an average price of $3.45 compared to 2.45 prior to oil run in the market or approx. $7 billion dollars taken out of the economy.
More than 7 BILLION DOLLARS in one year
Can you imagine how many jobs are lost as a result of an extra 7 billion dollars coming out of the economy to heat homes?

JET FUEL
Jet fuel 2.77 to 3.44/gallon up from under $1/gallon 10 years ago 17.5 billion gallons per year weakened airline industry, weakened wages, fuel surcharges passed on to gen public... 34 billion over 10 years
 More than an 3.4 BILLION DOLLARS AVG. Per Year
Can you imagine how many jobs are lost as a result of an extra 3.4 billion dollars coming out of the economy to fuel jets?



I imagine that a huge number of jobs, many homes and significant amount dignity would not have been lost if not for the artificially inflated costs of energy that benefited Wall Street, Big Oil, and Oil transport and storage companies.
  
It's important to note that during this time Wall Street speculators, BIG bank, oil companies, oil storage and transport companies raked in insanely high profits. 
 It would seem that most of the benefit here would be going to oil companies. Yes some, but don't take your eye off of the Banks. Formerly classified as speculators, the biggest banks are now classified, through some stroke of classification voodoo, as hedgers, as if they are no different than oil companies in the eyes of the Commodities Futures Trading Commission (CFTC).
A more thorough explanation can be found here. Sen. Bernie Sanders of Vermont saw fit to share some illuminating documents regarding speculation in oil. Enjoy or vomit, whichever it moves you to do.

So while there are plenty of places to look for why our country is in such a financial mess, do not overlook the artificially inflated fuel costs and the TRILLION plus dollars diverted out of the economy and into the pockets of Big Oil and Big Banks.

http://thinkprogress.org/green/2011/09/15/317330/leaked-cftc-oil-speculation-data/

Data was compiled from several sources including AAA, the Dept. of Energy, and Dept of Transportation.

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