As it is right now, gas in the metro Atlanta area is hovering around $3.40 a gallon, with more increases on the way. There is no oil shortage, you can buy all you want at this price.
This is the way it all started three years ago, gas prices went up, spending on non essential items went down and business's started to suffer. The housing bust started at the same time, coincidence? I don't think so. I wrote about this very thing back then and people said I was imaging things. I said,"when gas hits $4.00 a gallon, the construction business is doomed and people will give up on mortgages that they can't afford anymore." Guess what? It happened just like I said it would.
The construction business hasn't recovered yet, unemployment in Georgia is still over 10%, and the glut of foreclosures hasn't went down. Nationally the press reports the unemployment rate at the present time of about 8.9%, however, this is misleading and the number is really bogus. They fail to take into account the number of people who have just given up looking due to fact that the job market is failing them. They also fail to recognize the formally self employed people that have lost their companies and are not eligible to file for unemployment benefits. You also have another segment of the population, the underemployed, people working two and three jobs just to make ends meat. If you take these people into account on a nationwide basis the number for the unemployment rate will be somewhere closer to 15 to 18%, which means that about 2 out of every 10 people right now are struggling to survive.
Gas prices are going to cause another prolonged recession to be even longer. The price at the pump will translate again to less spending on other products, just as it did in the past. The service station cashiers that I have talked to locally have already seen it happening again. People are paying just for gas and not coming in to purchase other goods. At a local BP station in Dawsonville, Georgia, Sam said,"in the past two weeks she has seen a 35% fall off of customer purchases for other than fuel. The only thing that has increased is Lottery ticket sales." This means as customers get more and more desperate, they are willing to take a chance on the lottery as a saving grace. No matter how stupid that sounds, people in desperate times takes desperate measures.
The Federal government seems to have no clue as to what is happening. They rich and the powerful in DC don't realize what is happening to the general public and the true effect this having on the lives of many. They will continue to ride around in their private jets, limos and SUV's will the tax payers foot the bill for all of them. They don't seem to understand that that just like before, gas can be a budget buster for a lot of working people across the US.
Will we see $4.00 gallon gas in the next few weeks? If we do, watch to see what happens to restaurants and other local stores. Revenues will go down, just like before, people will loose jobs again and the unemployment rate will hit all time new highs. Then as people loose their jobs, mortgages will begin to fail again, just as before.
What can we do about it? Not much in the short term. We have more oil in the mid west United States that all of Saudi Arabia, but the environmentalist won't let us get it. We don't have any new refineries and haven't built any in over 20years, environmentalist again. We have capped well heads in the mid west that the government pays to keep capped, whats that all about? We have national oil reserves that we don't touch like it couldn't be replaced, that's a bogus argument.
Read my article "More Oil in Mid west" that will give you plenty of facts and then when you are spending $100 dollars to fill your tank, ask yourself, "do they even care at all about us?"