Obama to Main Street: Go buy a smaller car, stupid...
President Obama has started his 2012 campaign and will being popping up in the new for various occasions. Today in Fairless Hills, PA he spoke to a wind turbine plant about renewable energy and the need to get away from oil dependency.
This is not a story from 2008... this is TODAY, April 5, 2011. What was the topic? Gas prices. Obama's recommendation: Obama to America: Trade in the Gas Guzzler Son!
"Gas prices? They're going to still fluctuate until we can start making these broader changes, and that's going to take a couple of years to have serious effect," Obama said.
Obama needled one questioner who asked about gas prices, now averaging close to $3.70 a gallon nationwide, and suggested that the gentleman consider getting rid of his gas-guzzling vehicle.
"If you're complaining about the price of gas and you're only getting 8 miles a gallon, you know," Obama said laughingly. "You might want to think about a trade-in."This is coming from the guy that uses one of the worlds largest jumbo jets as a personal plane and arrives in style at events with an entourage of GMC Suburbans and Cadillac Escalades. I wonder if Obama has to use his personal AMEX at the pump or if he has a corporate card? I suppose, however, that he is the President of the USA. Which seems to be useful in every aspect of life other than getting a budget pushed through.
Part of Obama's plan is to reduce oil imports by 1/3 by 2025.
Great idea, but I have to say that this sounds allot like 2008 to me. Obama pimped the idea of needing to break free from foreign oil a but-zillion times in 2008. I guess the 'clean energy' campaign worked in 2008, so why not again today. What have we done with clean energy in the last 4 year? Not much. We had an energy problem in 2008 that fixed itself with a recession... Is that the plan this time around as well?
Obama is not a Master Fed Wizard. He knows no monetary Fedspeak pimp language to sooth the masses. However, the President's attitude towards high prices do not mesh with Bernanke's 'I See No Inflation' talk.
Those two need to grab a Sam Adams and get their stories strait.
Oil Boils Higher
Crude screamed higher again today-- closing at $108.63.
Gas is at an avg of $3.69 a gallon.
I can't find a chart in the world that does not correlate QEII with rising energy costs. Gas prices are screaming higher each day, week and month-- With the most recent 2 month period seeing an increase of $0.48 a gallon. If this rate continues we will be north of $4.20 a gallon by the end of QEII.
Europe should raise rates this week, but I do not believe it will help gas prices. We may see the Brent spread tighten to a more 'normal' range of $1.00-$4.00. Today the spread is at just under $14.
Killing The Dollar
Obama also commented today that there is little that can be done to stop the rising energy prices:
"I'm just going to be honest with you. There's not much we can do next week or two weeks from now," the president told workers at a wind turbine plant. It's a theme Obama's struck before as he tries to show voters he's attuned to a top economic concern with gas prices pushing toward $4 a gallon.Obama can not control Ben Wizzie or the Fed-- that is really all he needed to say. The only way to slow energy cost increases right now is for the Feds to end QEII AND (This is a 2-parter folks) take a more hawkish stance on accommodate monetary policy. Simply ending QEII does little to help the dollar. If the Feds are going to pimp the S&P higher and higher and claim the economy has returned to the days of sunshine and cookies they have to raise rates and act like these events are actually happening. In my opinion unless both of these are done the dollar will continue to weaken.
Main Street Starting to Feel the Effects?
Main Street Ready to Say UNCLE to gas
Airlines, shipping companies and other U.S. businesses have been squeezed. The rising prices are further straining an economy struggling with high unemployment and a depressed housing market.
"The surge in oil prices since the end of last year is already doing significant damage to the economy," says Mark Zandi, chief economist at Moody's Analytics.
Unlike other kinds of consumer spending, gasoline purchases provide less benefit for the U.S. economy. About half the revenue flows to oil exporting countries like Saudi Arabia and Canada, though U.S. oil companies and gasoline retailers also benefit.
For consumers, more expensive energy siphons away money that would otherwise be used for household purchases, from cars and furniture to clothing and vacations.A counter point to this argument is made at the end of the article:
In a speech last week, Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, offered hope that higher oil prices won't persist long enough to do much damage.
"Large increases in food or energy prices tend to be temporary," Pianalto said. "History shows that they are often followed by sharp declines."Sandra Pianalto is correct-- Those sharp declines are usually due to a recession.
Is that really what is on the horizon? Another recession? That is the ultimate squeeze on Wall Street and Main Street.
I've said it before...
It is NOT different this time.