For the "average" individual tax payer, I figured it amounts to about $342.20 per year, or (($1.73 - $1.40)*20gal)*52wks. That is, if the "average" American fills his gas tank up once a week. Then there is the recently instituted Bush "travel" tax, for those of us whose used our cars/trucks/RVs last month to visits friends or family, or to just get away from it all. Our two week contribution: $66.00.
Problem is, these new "taxes" don't go into the coffers of the US, and thus we can't even feel that at least we're doing our part to decrease the massive red ink the Bush Administration has amassed in just two and a half years. No, these funds go directly into the accounts of Exxon, Shell and other gasoline producers who are swimming in the sudden cash flow that a single month 20 cents per gallon jump in prices will bring in. And while US consumers were assured by the Administration that the Iraq War would open the oil gates and we'd see prices fall through the floor, gasoline prices are at their highest ever, up almost 25%, or an average of $.33/gallon over last summer.
Administration economists have acknowledged that the spike in prices is of "some" concern, but shrug off the bulk of the problem by assuring us that prices will fall after the end of the summer driving season, traditionally marked by the Labor Day holiday. Checking in on the AAA's Daily Fuel Gauge Report, there doesn't appear to be much post-Labor Day downward movement, but I expect I'm being impatient. However, seeing that most late summer driving seasons aren't punctuated by a significant shutdown in oil refining due to a massive power outage, as well as labor disputes in two of the worlds major oil producers and ongoing war-induced disruptions in another. While gasoline futures dropped sharply yesterday, it's expected that, due to these complicating factors, it will take longer than usual for consumers to see any relief at the pump.
But the pressure on consumer wallets from higher energy prices is far from over, even with lower gasoline prices. Many of the same problems which plagued the summer driving, i.e., gas season, will spill over onto the winter heating season. Already, natural gas prices are well above their usual summer averages, and may in fact hit record levels of $10/million BTUs this winter. And while consumers will either have to open their pocketbooks or lower their thermostats, the large number of manufacturers who rely on natural gas for both energy and as component of their products will have an additional option; reducing their workforce.
Thus, while many economic indicators currently point to a more favorable business climate, I suspect that many will not take the risk of hiring new workers until after the energy wildcard plays out this winter. Current workers will be pushed to be more productive to carry the increasing load, and corporations may even get a break by Republicans in Congress and the Administration allowing them to declare more workers "exempt" from overtime pay.
But what of consumers? How long will the Bush $400 child tax credits provide cover for the surge in energy prices, both at the pump and in the home heating oil tank? My best guess is that we'll first feel the effects in October, when the summer's credit card statements come due and consumers are filling their oil and propane tanks in response to colder fall nights.
Posted by MB Williams at September 3, 2003 10:52 AM | TrackBack