Oil going up indicative of U.S. GDP growing
June 16, 2009
– Comments (4)
Oil going up will show that U.S. GDP is growing 9-Jun-09 06:38 pm The U.S. GDP is about $12 Trillion per year. The U.S. uses oil to make products and uses oil for transportation. The U.S. uses 20 million barrels per day. Oil was at $120/bbl last year at this time, so the US consumer was using oil at a rate of $864 billion/yr. In May 2009, oil was at $60/bbl, so the US consumer is using oil at a rate of $432 billion/yr. True, the US consumer is spending less because the oil needed for products and transporation is $432 billion/yr less. This is 4% of the GDP. The fact that consumer spending is not down by 4.0%, but is down by only 0.7% from the prior year shows that the reduction in GDP is dominated by energy costs. That is why people are saving much more in 2009. The reduction in the GDP is a great thing because it is caused by reduced energy costs. Everything is selling at cheap prices. People are getting all the products they need and more in 2009 and they are doing it without needing any new credit. If oil costs remain around $70/bbl, we are going to truly see that demand is growing and that GDP is not shrinking at all. $9 Trillion in cash is sitting on the sidelines. These are the best of times... most people will catch on soon.
Excellent post by
Randy @ Cupertino, California
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