CBS Tampa reports about pain at the pump and then proceeds to miss the real story altogether:
Talk about pain at the pump! Some Florida drivers are spending nearly $6 a gallon to fill up their gas tanks.
According to GasBuddy.com, motorists are shelling out $5.89 for a gallon of regular gas at a Shell station in Lake Buena Vista, topping out at $5.99 a gallon for premium. It doesn’t get better at a Suncoast Energy station in Orlando, where drivers are paying $5.79 for a gallon of regular.
“Prices over in the Disney World area are much higher than any other place in Florida,” Jessica Brady, AAA spokeswoman, told CBS Tampa, adding that people regularly complain about gas prices in that area.
The Sunshine State is opening up its wallet, paying an average of $3.67 a gallon of unleaded gas, 12 cents more than the national average. And it’s only expected to go up.
“It doesn’t look like we will have relief at the pump anytime soon,” Brady told CBS Tampa. “I do think we will see prices surpass $4 a gallon. I think we will see that closer to spring time.”
For the record, diesel is over $10.75 a gallon in Scotland at the current exchange rate – but that isn’t the point. The point is that the press is clueless about the real reasons for the high prices and, in fact, don’t even mention the two most important causes:
One reason for the high prices is the conflict with Iran over the Strait of Hormuz. Iran has threatened to disrupt oil shipments through the waterway due to the European Union sanctions leveled against the country over its nuclear program, causing the price of crude to skyrocket. Trading on a barrel of crude today is a little over $106.
Another reason for the high gas prices: positive economic news. The drop in the unemployment rate and improved housing market numbers have caused gas and oil prices to rise.
“I know it frustrates quite a few consumers why positive news will lead to higher prices,” Brady told CBS Tampa. “It really just comes down to speculation.”
A third culprit behind the gas price boom is Greece. The EU’s bailout for the indebted country only adds to the global fuel demand.
And because of these reasons, Brady believes that Florida and the rest of the U.S. could see historic gas prices.
“I think this year we will see much higher highs.”
Believe it or not, those prices aren’t the highest in the nation. According to GasBuddy.com, motorists in Alaska are paying a whopping $6.34 for a gallon of regular at some gas stations. The cheapest gas can be found in Wyoming at $2.75 a gallon.
Iran, Greece and I really question these two: “drop in the unemployment rate and improved housing market numbers” – given the fact that there are fewer people (as a percentage) actually working today than in the past 40 years and housing is still a disaster. I think that both of the last two statements lack substantiation and border on journalist malpractice.
Redstate has the breakdown of the unemployment numbers:
The unemployment rate is defined by the Bureau of Labor Statistics as the persons who are jobless, looking for jobs, and available for work (Otherwise defined as the unemployed) divided by total number of people available to be working.
The key disclaimer here is that those who are neither receiving unemployment benefits nor otherwise not actively looking for work are not included in this number.
If you look at January’s numbers, the unemployment rate dropped to 8.3% largely because of people dropping out of the workforce (thus, decreasing the number in the denominator) than by the additional 243k persons who gained employment during the month.
How does one verify this? By looking at the labor participation rate. Labor force participation rate is defined as the labor force as a percent of the civilian noninstitutional population; or in other words, the number of people employed, divided by the entire adult population. This is a much more gross number. In January, the labor force participation rate dropped to 63.7%, its lowest level since the early 80s recession.
What does this mean? Well, what it means is that although the BLS numbers on unemployment are accurate, they are misleading. Overall, the number of people working today is far less than before Obama took office. Furthermore, if you include the people that are no longer looking for work, the unemployment rate is 10.3%. And, in fact, that number has largely been stable since 2009, even considering the Obama stimulus and other work programs.
Improved housing numbers? Not so much – investors are buying up distressed properties:
Sales of previously owned U.S. homes rose in January to the highest level since May 2010 as investors took advantage of lower prices to buy distressed properties.
Purchases climbed 4.3 percent to a 4.57 million annual rate, less than forecast, from a revised 4.38 million pace in December that was slower than previously estimated, a report from the National Association of Realtors showed today in Washington. Distressed properties made up the largest portion of all purchases since April.
Almost one in four of all transactions was made by investors. That’s helping to clear the market of unsold properties and may stabilize prices. While the threat of more foreclosures risks slowing progress, housing may get a boost from gains in employment and mortgage rates that are near record lows.
“I don’t think we’re seeing a full-fledged recovery in housing,” said Michelle Meyer, a senior economist at Bank of America Corp. in New York. “Outside of investors and people wanting to buy distressed properties, the primary housing demand is recovering much more gradually.”
The two reasons for high gas prices that never got reported are the:
- Devalued US currency due to current economic policy
- The government chokehold on oil production in the US
CBS went right to “speculators”. If it is “speculation” how do they explain this in the natural gas market?
US natural gas prices have slid to their lowest point in a decade and the industry is braced for further declines as the shale rock drilling boom redraws America’s energy landscape.
The price collapse – down 85 per cent from an all-time high in 2005 – could benefit heavy industries in the US but is likely to hurt companies such as ExxonMobil and BHP Billiton, which have spent billions of dollars over the past three years to exploit natural gasfields in the US.
Here’s a clue CBS – it is in the first paragraph:
…the shale rock drilling boom…
The same could happen to crude if the Administration would get out of the way.
CBS should be ashamed to have printed such a simplistic report that left two major causes for the price increases out.