Jobless Americans Don't Drive To Work, But They Do Drive Down Demand For Gas

Bill Hobbs | April 12, 2012 | 10:26am EDT
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It's classic good news-bad news: The pain at the gas pump may be easing a bit - because the economy isn't growing very fast and people who don't have jobs to drive to don't buy as much gasoline.

“U.S. gasoline pump prices may have peaked for the year as demand slides, job growth slows and crude prices moderate,” says Business Week.

The average price of a gallon of regular gasoline has fallen in recent days to $3.915 a gallon, after surging 20 percent and peaking at $3.936 on April 4, according to data from AAA.

MasterCard's SpendingPulse data, analyzing credit card receipts, shows Americans have purchased 5.3 percent less gasoline so far this year than during the first three months of 2011, says Business Week.

The U.S. Department of Energy is predicting less demand for oil in 2012 than in the past 11 years, although the department's monthly Short-Term Energy Outlook still forecasts the average price of gasoline will peak in May at $4.01 a gallon.

Why is demand for gasoline down?

It's the economy, stupid.

The sluggish American economy, with unemployment still over 8 percent, is one reason experts say demand for gasoline is down - helping to bring down the price at the pump. The U.S. added the fewest jobs in five months in March, and the official unemployment rate has not been below 8 percent for even a nanosecond during the Obama administration. The real unemployment rate is actually much higher, as more than 5 million Americans have simply dropped out of the workforce, unable to find a job. Since they aren't looking for work, Uncle Sam does not count them as unemployed when calculating the “unemployment rate.”

Meanwhile, signs that the global economy is slowing should keep a lid on short-term prices, Telvent energy editor Brian Milne told USA Today. Milne notes that China imported 6 percent less crude oil in March.

While a slight decrease in gas prices is good for consumers, to the extent that it is due to the sluggish economy, anemic jobs growth and chronic long-term high unemployment, it is the proverbial lipstick on a pig.

Chances are, most of those millions of unemployed Americans would rather have a job and pay $4 a gallon for gasoline to get to work, than be jobless and broke with gasoline prices at, say, $3.50 a gallon.

Still, in full Obama Protection Mode, Bloomberg News Service rushed out a report yesterday asserting that a slight decrease in the price of gas essentially gets Obama off the hook on the issue.

“Signs that gasoline prices may have peaked signal relief to both American drivers and President Barack Obama, who Republicans have tried to tie to a climb in the costs,” Boomberg said.

“That may be good news for Obama, because gasoline costs had risen to among the top concerns for Americans and voters tend to blame incumbents for their economic anxieties,” said Bloomberg, quoting Bruce Oppenheimer, a Vanderbilt University professor who has studied energy and politics as saying, “The lower they go, the less they will be an issue.”

Bloomberg notes that a Gallup poll released March 28 found gasoline prices were second only to the economy on a list of issues voters are most concerned about, ahead of affordable health care and unemployment.

The $4 a gallon mark is “a political danger zone and symbolic threshold” for voters, according to Paul Bledsoe, senior adviser to the Bipartisan Policy Center in Washington DC.

While the national average price hasn't reach $4 this year, motorists in many parts of the country were paying well above $4 a gallon.

Bledsoe told Bloomberg that, if gasoline prices recede, the political debate will probably return to the broader economy and fears about unemployment.

“Economic growth and job creation are the twin peaks of political outcome in this election,” he said in an e-mail.

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