Thursday, February 18, 2016

The price of gasoline

I just filled my gas tank and was pleasantly surprised. Gasoline here in Southern California is now $2.15 a gallon. we have not had gasoline this low since the great recession. In other words, it has not been this low in 7 or 8 years. I actually filled my gas tank for a little over $15. How awesome is that? So the price of oil dropping like a rock is fantastic for me at the gas pump. But what does it say about the economy? I think gasoline and oil are telling us that things are not healthy in the economy. If the economy was healthy, then why is gasoline dropping so much? Why is oil dropping so much? Yes there is a case to be made about overproduction in oil. But does that account for the drastic drop in prices? I don't think so. The only thing that would account for prices dropping this dramatically is a slowdown in the economy. In other words, there has been a drop in demand which has forced prices to follow. I look at gas and oil as a canary in the coal mine. And the canary has just died. It's great for me at the gas pump, but I think things are not going to turn out so well overall.

What do you think?