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Relentless rise in oil prices tests economy’s resilience
Peter G. Gosselin, Los Angeles Times
After years of increases, some fear a tipping point has finally been reached.
Only a few weeks ago, prominent policymakers and economists were cheerfully asserting that the U.S. economy would dodge recession and keep chugging forward despite a housing bust, a credit crunch and continuing job losses.
“The data are pretty clear that we are not in recession,” said President Bush’s chief economist, Edward Lazear. Treasury Secretary Henry M. Paulson Jr. declared “the worst is likely to be behind us” and confidently predicted that more than $100 billion in tax rebates would help create half a million new jobs by the end of the year.
But instead of clearing, the skies over the economy have ominously darkened in recent days. The chief reason is oil. And there are signs the nation may have reached an economic tipping point after years of shrugging off the petroleum problem.
“We may finally have crossed the line where the price of crude actually matters for most companies,” said Peter Boockvar, equity strategist at New York financial firm Miller Tabak & Co. “The stock market has been in la-la land when it comes to oil, but they got a pretty good dose of reality the last few days.”
… Among the signs that the economy may finally be feeling the effect of rising oil prices was Ford Motor Co.’s announcement Thursday that it was abandoning any hope of making a profit this year or next now that sales of its gas-guzzling pickup trucks and Explorer sport utility vehicles have plunged.
And experts said that the other two U.S. automakers, General Motors Corp. and Chrysler, may be in even greater trouble.
… Energy Department figures show that oil and fuel consumption dropped by 2.3% over the last year. And the Transportation Department released data Friday showing that the number of highway miles traveled by Americans in March fell 4.3% from a year earlier, the steepest year-to-year drop since the government began keeping records during World War II.
But the price of oil has climbed so quickly and the most recent round of increases has struck at a moment of such vulnerability that many analysts are concerned that the economy is making a sharp swerve — one that could set its direction for a long time to come.
“The economy sailed through $70 and $80 [a barrel] oil with almost no friction at all,” veteran energy analyst Daniel Yergin said. “But there’s a big difference between $80 and $120 or $130,” he said. “Now we have an oil shock on top of a credit crunch, a housing slump and a slowdown.”
(24 May 2008)
Bombing Iran: The Clamor Persists
Massimo Calabresi, TIME Magazine
… the Senators’ questions [of Gen. David Petraeus] show how persistent the concern is on Capitol Hill that President Bush could be secretly planning a military strike against Iran.
In theory, the idea of a war with Iran should be a non-starter in a nation whose war-weary public has no appetite for further military adventures in the Middle East, no matter how determined Iran may be to get a nuclear weapon or to arm and train anti-U.S. forces in Iraq.
… If diplomatic efforts continue to look unlikely to produce an outcome acceptable to the Administration, would President Bush consider military action? The odds have to be against it, given the domestic environment. But the tone among some of his allies abroad is very different.
(22 May 2008)
Americans Driving At Historic Lows
Press release, US Department of Transportation
Eleven Billion Fewer Vehicle Miles Traveled in March 2008 Over Previous March
WASHINGTON — Americans drove less in March 2008, continuing a trend that began last November, according to estimates released today from the Federal Highway Administration.
“That Americans are driving less underscores the challenges facing the Highway Trust Fund and its reliance on the federal gasoline excise tax,” said Acting Federal Highway Administrator Jim Ray.
The FHWA’s “Traffic Volume Trends” report, produced monthly since 1942, shows that estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent as compared with March 2007 travel. This is the first time estimated March travel on public roads fell since 1979. At 11 billion miles less in March 2008 than in the previous March, this is the sharpest yearly drop for any month in FHWA history.
Though February 2008 showed a modest 1 billion mile increase over February 2007, cumulative VMT has fallen by 17.3 billion miles since November 2006. Total VMT in the United States for 2006, the most recent year for which such data are available, topped 3 trillion miles.
Additionally, the U.S. Department of Transportation estimated that greenhouse gas emissions fell by an estimated 9 million metric tons for the first quarter of 2008.
The estimated data show that VMT on all U.S. public roads have dropped since 2006. The FHWA’s Traffic Monitoring Analysis System (TMAS) computes VMT for all types of motor vehicles (motorcycles, cars, buses and trucks) on the nation’s public roads. These data are collected through over 4,000 automatic traffic recorders operated round-the-clock by state highway agencies. More comprehensive data are published in the FHWA’s “Highway Statistics” at the end of each year
Energy Independence Cmte. Questions Secretary Bodman (video)
US House of Representatives via Energy Policy TV
Washington, DC – Samuel Bodman, Secretary, U.S. Department of Energy (DOE); Chaired by Representative Ed Markey (D-MA)
The Select Committee asks Secretary Bodman questions on gas prices, the Strategic Petroleum Reserve and the Bush administration”s defense of the $18 billion in tax breaks the top five oil companies receive.
Related content found at:
House Energy Independence and Global Warming Select Cmte.
(22 May 2008)
The first 35 minutes of the video are devoted to opening statements by Representatives. Dr. Bodman’s testimony begins at about 35:00.