I just couldn’t pass on the trifecta of old TV shows. Remember Jed Clampett shooting at dinner and finding the ‘Black Gold, Texas Tea”. We are just about at that point with energy exploration in the USA. We have found new technology that is opening up a plethora of new sources of carbon based energy sources, from natural gas to oil to coal.
Crude oil prices are hovering near $50 per barrel, gasoline is under $2.00 per gallon and diesel is under $3.00 per gallon. That is opening up a huge amount of money that can flow into other sectors of the economy. Every penny in lower gas prices equates to about $1 billion annually in customers discretionary spending pocket. Currently each household in the US has around $500 extra to spend. Will they spend it on small indulgences like a meal out at a restaurant?
Jed Clampett’s vehicle (was it a car or a truck?) probably did not use diesel, but today’s fleets are reliant on it. With the lower prices on each gallon of fuel, you would expect that transport rates would fall. That has not been the case yet. Truckers are saying that they have a lot of ‘making up’ to do financially and rates have not seen a decline. Additionally, the impending driver shortage is causing creep in wages paid to the 18 wheel pilots. The net effect is no change in cost of transporting goods.
Some economists say that rising crude oil prices are absolutely necessary if we want to see global growth. I think that they were basing that statement on an assumed level supply of oil. Now that we have an increasing supply, that theory might need to be revisited. Hopefully our leaders in Washington will pass legislation to keep the energy flowing and the economy growing. Mr. Drysdale (Jed’s banker) would appreciate all of us having a little more money to both save and spend.