A “Hockeystick Graph” with a Hook
Looks like the oil price has hit bottom, and is starting it’s steady march back up. This week futures settled firmly over $60/bbl. More worrisom than the price this week is the rate of the new rise over the last few weeks. Take a look at this updated chart I found at Wikipedia (click to visit):
In fiscal year ’08 – from the Fall of 2007 to the Fall of 2008 – American consumers, governments, and businesses paid nearly $1-trillion dollars for imported petroleum to make fuels like gasoline and diesel. One trillion dollars – per year.
If you do the math, this comes out to an average cost to every living American citizen of ~$3200/yr. To the average “family of four” we’re talking a hit of ~$13,000. If your family was very average and household income was $42,000 – last year you paid approximately 30% of your income for oil. (It’s much worse for people who drive as much, but earn less.)
Last summer oil prices had doubled for no real apparent reason, and a trillion dollars left the American economy directly at the “grass-roots level”. People stopped paying their mortgages or spending new money.
If any of the economic recovery plans actually do work, and our economy sputters back to life, expect oil prices to continue to “recover” as well.
Keep an eye on that little hook – the start of a “double hockey-stick”?