I’ve been discussing how the price of Oil will eventually dampen consumer spending for over a year (and as recently as this week). Oil has finally started to show up as the proximate cause for many retailers weak numbers.
But to really get a sense of how its big its bite is, consider this table, via The Mess That Greenspan Made. Note that these fillups are at $2.70/Gal — and we’ve seen prices for premium over $3 on the East coast:
Lastly, you may be wondering what Oil prices have to do with the Fed. After all, the source for this is a blog titled The Mess That Greenspan Made. Here is Tim’s explanation:
One of the most intriguing aspects of peak oil and its impact on oil and gasoline prices is the role of China and the U.S. Federal Reserve. It is clear that the monetary stimulus applied by the Fed since 2001 has had a large role in the economic boom in China and has resulted in a dramatic increase in oil consumption in that part of the world.
This increased demand is, to some degree, driving today’s oil price. Whenever peak oil does occur, it surely will be sooner than it otherwise would have been had U.S. monetary policy not so stimulated these economies half way around the world.
Did the Greenspan Fed cause $65 oil? No, but they sure haven’t helped to keep the price down.
Thanks, Tim — fascinating stuff.
The California SUV Fill Up Index
The Mess That Greenspan Made, Thursday, August 11, 2005