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Economy Watch: Look for falling gas prices and increased consumer confidence

Discussion in 'Picture Framing Business Issues' started by Paul Cascio, Jun 22, 2008.

  1. JRB

    JRB PFG, Picture Framing God

    What amazes me is that there are some people who still think Richard Nixon was the worst president we have ever had. Most of those folks also are proud of all the credit cards they have.

  2. AnneL

    AnneL SPFG, Supreme Picture Framing God

    "Only Nixon could go to China." -Mr. Spock

    (Sorry, couldn't resist. Carry on with the discussion.)
  3. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    Next thing your going to say is that Bush was responsible for the "tulip bubble" in Holland. In spite of 9/11 spawned in the Clinton years, a just war authorized by Congress and relentless filibustering by you know who, Bush is leaving office with a more robust and prosperous US economy than when he took office. (This despite acts of God and human "economic" behavior beyond a President's control.)
  4. Paul N

    Paul N In Corner

    Pat, you forgot the green text color.

    That's the biggest over-statement of the century! Give me a break! Just because you hate Clinton it doesn't mean his economy was bad. It was the most prosperous 8 years in living memory.
    Clinton's worst economy day was better that any of GWB's best economy days!

    You cannot say in good faith "GWB" and "good economy" in one sentence. It is not true, it's even preposterous!

    Actually you cannot say "GWB" and good anything in the same sentence!

    Amazing how hating Clinton would cause economic amnesia.
  5. Dermot:

    Dermot: In Corner

    US wealth by household to 2007


    Source: http://en.wikipedia.org/wiki/Economy_of_the_United_States


    Notice how the Bush years aren’t quite as good as the Clinton years. Bush was touted as a business man when he was elected. An energy guy too. It was thought, incorrectly, that he would be able to implement a sensible energy policy and the Dow would do well.

    Source: Dow Jones
  6. Bob Doyle

    Bob Doyle SPFG, Supreme Picture Framing God

    Dermot, your chart shows 9/11 at its peak. I saw so many non-profits go under as while everyone was giving money it was to 9/11 related efforts. The no-kill animal shelter, which had just expanded as they were doing so well had to close after 9/11 because all their donors took their money and sent it to 9/11 relief.

    Pat too funny!left is right, up is down, Bush is good! Thanks for helping to make me laugh! Clinton spawned 9/11! In Rove's dreams! And the 'w's were taken from the keyboards! How would GW know, he doesn't use the google.
  7. surferbill

    surferbill SGF, Supreme Grumble Framer

    That's some funny stuff!!
    The war was authorized by congress because they were lied to about WMB by George W and Uncle Dick.
    The economy is holding on by it's fingernails, while the price of oil goes through the roof.
    Oh, by the way, weren't we assured that the oil men in the oval office would be able to bring down the price of oil, not have it triple in price in 2 years?

    I'm just counting down the days till "W" is out of office, and can't do any more damage.
    I just hope Uncle Dick does not get riled up, and decide to invade Iran before January 20th.
  8. Paul N

    Paul N In Corner

    Which will increase the price of oil and offer more war profiteering $$ to Dick's company, Halliburton.

    DTWDSM SGF, Supreme Grumble Framer

    Paul, after seeing today's report, Am I correct to assume that your previous month's sales were well below what the experts forecasted? The consumer confidence is below what everyone thought and thanks to our wonderful media, everyone will hold on to their money even tighter than before now.

    I do think that the CPI will get better but not this year. A new president will not be the answer either. Whoever the new president is will have a big load on their shoulders and they will have to prove themself to the American public. That is a job that I would not want to touch with any sized pole.
  10. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    I was commenting on Consumer Confidence Index, not the Consumer Price Index, which measures inflation, and has acutally been rising. Sorry for the confusion.

    As for sales, yes. Based on my theory, I expect that most frameshops would have found last month's sales to be lower than expected. Accordingly, that would correlate with today's lower Consumer Confidence score.

    I do however, project an increase in Consumer Confidence resulting from a significant fall in gas prices, which is what I project will happen based on the things I mentioned in my original post.
  11. gemini

    gemini CGF, Certified Grumble Framer

    I kindly disagree Paul.
    1st off, the production increase was barely 200,000 bbls per day. Hardly anything to get excited about not to mention it has no effect economically.

    I maintain that if OPEC increases production it will be at the behest of our administration with politicians selling their souls to OPEC ministers, resulting in temp. lower gas prices.
  12. Dermot:

    Dermot: In Corner

    I know this won’t sound real to some, possibly because some don’t want to hear it…………. the reality is that OPEC have little capacity left right now to increase production……..

    The only real capacity worldwide that is not up to full speed is Iraq….who is managing oil production there!!!! they are at about 50% of capacity ……….and Russia has some small production issues also………

    All other producers are at or near full production capacity.

    Demand in the emerging economy’s China and India principally is driving the need for oil…….hence the current shortage……

    Production cannot meet the demand…

    A major driving factor in the “cost” as distinct from production of oil right now is the weakness of the US $ it is way below what it was a few years ago…..
  13. AnneL

    AnneL SPFG, Supreme Picture Framing God

    And getting production increased by drilling new wells isn't going to happen real fast either. The current wait for a drilling platform is 5 years from the time it is ordered to delivery. Plus there's the problem with not enough refinery capacity to handle what we are producing right now, so even if you increase production of oil, there will be no increase in the amount of oil refined since they are running at capacity now.
  14. Paul N

    Paul N In Corner

    This whole "let's drill now- everywhere!' battle-cry is so lame, it's ridiculous.

    According to almost any expert, if we start drilling today (assuming we know FOR SURE there is oil, say in the Gulf of Mexico), it would take 8-10 years for the oil to reach anyone!

    And maybe some Republican here could enlighten us as to why Geb Busch (you know, his brother), was against drilling off Florida's coast?? It's not only "environmental wackos" who were against it.
  15. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    The real "experts" in the oil business say 2-6 years depending on difficulty. Didn't Bill Clinton veto ANWR drilling 10 years ago? Regardless, futures will fall if the market believes that we are serious. You are right it was not only "environmental whackos" - it was also those who were afraid of them. Guess what? The polls have shifted.
  16. Paul N

    Paul N In Corner

    Drilling off Florida is easier, cheaper and faster. Yet it was a Bushie who vetoed it.
  17. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    Both are necessary. Read my post again for the reference to Jeb.
  18. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    Gemini, you may be right on both points. The article I relied on (http://money.cnn.com/2008/06/22/news/international/Saudi_summit/index.htm?postversion=2008062214) quoted 700,000B, but others have specified a lower figure, which would invalidate my projection.

    Also, as you implied, changes in any election year always need to be considered from a standpoint of political motivation.
  19. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    While I disagree with the exact amount of time to production, you're correct that it will take years for new production to begin. However, I believe the effect on prices will be almost immediate as such news almost always impacts prices.

    I also think that once the prices start to fall, they will fall rather quickly and substantially. Then, those falling prices will in turn boost consumer confidence and increase cinsumer spending. That's just my theory though, so we'll have to wait and see.

    GUMBY GCF SGF, Supreme Grumble Framer

    If we don't start drilling today it will be 5-10 years from when ever we do start.
    So start today 2013-2018 but if we keep putting it off it will never happen which is what has been taking place now. If we had started the process 5-10 years ago we would not be here at 140 a barrel.
    Tomorrow never comes.
  21. AnneL

    AnneL SPFG, Supreme Picture Framing God

    Especially when no one wants their view of the Gulf of Mexico to include oil rigs. That is one of the main sticking points to drilling there right now, the fact that some of those rigs would be with in site of some expensive real estate.
  22. couture's gallery

    couture's gallery PFG, Picture Framing God

    we'll just put xmas lights on the rigs and call them gulf decor.
  23. Bob Doyle

    Bob Doyle SPFG, Supreme Picture Framing God

    LEDs CFLs or good ole fashion flares!
  24. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    What you are missing in your reference to the Clinton years is that 100% of the economy was a direct result of the first Bush and Reagan policies.

    The reduction in capital gains taxes is what fueled the economy for those years. The Roth IRA also allowed people to move money. Taxes freeze up the flow of money through the system.

    Now we are looking at tax proposals from congress which will further freeze the system. The only way to loosen the flow of money is to give corps a reason to spend it.

    Tax receipts are at their highest when the tax rate is low. When businesses and the wealthy spend their money new jobs are created. New taxes are collected from employees and sales taxes. Business expansion creates jobs and jobs cause people to spend.

    Go ahead and raise taxes and give that money to people and programs that produce nothing only take from the system. Any body remember the Carter years?
  25. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    An item that is 100 feet tall can be seen no farther than from 11.3 miles. Drilling happens at distances of over 50 miles.
  26. Bob Doyle

    Bob Doyle SPFG, Supreme Picture Framing God

    How come republican presidents leave prosperity for the future presidents to claim, but democrats leave pending deficits, disguised as surpluses?
  27. couture's gallery

    couture's gallery PFG, Picture Framing God

    Jeff is right..you cannot see the rigs from any shore...the rigs in the gulf off texas and louisianna are at least 40 miles...i used to go fish around them and had to run 2 - 2.5 hrs to even get out there...most of my wife's relatives work on those rigs and it takes at least 15 -20 minutes via helicopter to get out to them....I was just kidding about the xmas lights.
  28. AnneL

    AnneL SPFG, Supreme Picture Framing God

    Then why were they saying on the news that one of the prime objections to new drilling is because it would be close enough to shore so it would affect some of the wealthy communities down there? Or did they mean that in case of a spill they would be affected? I assumed they meant the rigs would be visible, but then maybe not. :shrug:
  29. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Most of the opposition is from the Dems and by claiming it would affect the wealthy they garner some support from those who think they might be affected.

    Case in point:

    The worst oil disaster in history is the Exxon Valdez. The amount of oil that naturally seeps from the ocean floor is 2 MILLION TIMES THAT AMOUNT DAILY. If the Valdez was 50 miles offshore it would not have been much of a disaster that could be relived ten million times by those opposing offshore drilling.
  30. Bob Doyle

    Bob Doyle SPFG, Supreme Picture Framing God

    Jeff, Mother Nature doesn't drive single hull tankers DRUNK! There is a difference.

    Sad to say that the SCOTUS today deemed the Valdez settlement was excessive and I guess that means Exxon is off the hook on that one. Ya think they;ll pass their savings on down to us, you know, trickle down like?
  31. Dermot:

    Dermot: In Corner

    Something must be happening with the price of oil……….the airline stocks in this part of the world jumped today…

    Airline stocks have been down for the past while with their exposure to the high cost of oil….
  32. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Only if we give them tax incentives that make doing so a good business decision.
  33. AnneL

    AnneL SPFG, Supreme Picture Framing God

    Heard this discussion last night on the Newshour about what is driving the price of oil:


    Also, from an earlier report aired last week:

    Many Democrats and some Republicans who represent coastal states oppose ending the moratorium.

    "This is not something that's going to give consumers short-term relief and it is not a long-term solution to our problems with fossil fuels generally and oil in particular," said presumptive Democratic presidential nominee Sen. Barack Obama, according to the Associated Press.

    Majority Senate Leader Harry Reid of Nevada also voiced his opposition.
    "Despite what President Bush, John McCain and their friends in the oil industry claim, we cannot drill our way out of this problem," Reid said, according to the AP. "The math is simple: America has just three percent of the world's oil reserves, but Americans use a quarter of its oil."

    The president's call to resume offshore drilling appears to go against the 1990 policy of his father, President George H.W. Bush, who signed an executive order banning coastal oil exploration as well as of his brother, Jeb, the former governor of Florida, an outspoken opponent of offshore drilling.

    In 1981, a Congressional moratorium prohibited oil and gas drilling along the east and west coasts and in the eastern Gulf of Mexico. One motive for the federal ban was to protect tourism and lessen the chance of oil spills washing on to beaches.
  34. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    Bob, of course you need to show your political stripes proudly here, but I guess you know it's not a simple matter of Us Good vs. Them Bad, as you portray it. There's plenty of credit -- and blame -- to go around when it comes to our economy.

    Jeff makes a good point. Indeed, Clinton did inherit an economy on the rise, but there are two sides to every coin. He also left it fairly healthy for the Bush administration.

    We were all doing well in the second half of 1999, but some storms were brewing. The industrial scandals such as Enron and WorldCom, were born and incubated on Clinton's watch, largely due to changes affecting their investments within 3-5 years prior to the "bubble" bursting.

    9/11/2001 was, of course, a mess unrelated to either party, and its far-reaching effects would probably have confounded a Democratic President as much as it did Bush.

    Congress has a significant impact on the economy. Congresses during the Reagan years were heavily Democratic. They fought him tooth and nail, but ultimately gave him what he wanted. They could not defeat his popularity.

    When Clinton took over, the early congresses were stubbornly Reaganesque, and the economy continued as it was cast for quite a while. Later, Congress gave Clinton what he wanted. Remember the Republican sweep of 1994? That happened for some good reasons.

    GW Bush will leave the economy in ruins. He and the mostly-Republican Congresses throughout his terms have accomplished some good conservative goals, but have failed miserably in a lot of important matters.

    My Fearless Forecast for the next four years, no matter who gets elected:

    The next President will inherit a poor economy. But worse, he will inherit a do-nothing Congress. The next four years, Congressional battles will be turbulent, and so will our economy.

    There is almost no chance that meaningful Social Security reform will happen. Again. The same is true of tax-code reform. Again. Congress' most significant progress, if you care to call it that, will be toward socializing health care and raising taxes on everyone who earns income, in order to pay the bills. Forget that "tax-the-rich" stuff. We're all going to get it in the shorts.

    Especially if pump prices dip, the economy will improve somewhat next year, but will remain sluggish for at least two years. Right after the election, consumer confidence will pick up if Obama is elected, and remain poor if McCain is elected. Whichever way it goes, consumer confidence will remain mostly reactive to national media. That is, whether The New York Times says our economy is in the dumper, or in tall clover, it will be so.

    Oh, and Congress will still be funding our troops in Iraq and other Middle East countries, perhaps including Iran. If Obama is elected there will be some token 'troop withdrawals' and 'redeployments' to quiet the pacifists. If McCain is elected, pretty much the same things will happen over there, but our view will be different. In any case, we'll still have a dominant military presence in the Middle East for at least another decade.

    Batten down the hatches, boys and girls. It's gonna be quite a storm.
  35. AnneL

    AnneL SPFG, Supreme Picture Framing God

    Found this one from July 2001: http://www.pbs.org/newshour/updates/july01/oil_7-3.html

    It's interesting that Clinton wanted to open more acrage to drilling than W did. W scaled the plan back. George H.W. Bush signed an executive order banning coastal oil exploration, and Jeb was opposed to it too.

    Some of the other reading I was just doing said there is a real split between eastern Gulf Coast states and western Gulf Coast states. The eastern ones don't really want drilling in that part of the Gulf because of concerns about it hurting their tourism industry. The western ones, especially Louisana, want more since the oil industry is a large part of their economy.
  36. Dermot:

    Dermot: In Corner

    But think of the calm after the storm……..:thumbsup: :) :kaffeetrinker_2:
  37. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Amen to Jim Miller

    It is only getting started!!!

    As far as historical data about drilling for oil the only thing I can say is that GAS PRICES WERE 1/3 OF WHAT THEY ARE NOW.

    Oil won't be flowing for 5-7 years and gas won't be refined for 3-5 on expanded capacity but the price of oil is based on future availability. Should we discover that OPEC has a ten year supply of oil, prices will shoot up to ten times what they are now, in a day. If, on the same day, the U.S. discovers that it owns a 100 year supply of oil the price will drop to 10% of its current level but it will take 2 weeks for that to take place since millions of huge financial transactions must occur on the way down.

    There are only 2 choices:

    Start drilling or bend over.
  38. Jerry Ervin

    Jerry Ervin PFG, Picture Framing God


    I do not understand why so many people can't comprehend that fact.
  39. AnneL

    AnneL SPFG, Supreme Picture Framing God

    Maybe because we don't see it as so cut and dried.

    All the increased drilling in the world doesn't address the problem of not enough refinery capacity to process all that new oil. So who wants to volunteer to have a new refinery built in their backyard? The biggest thing keeping new ones from being built is NIMBY.
  40. Dermot:

    Dermot: In Corner

    Anne has a point about the time lines and the infrastructure………

    Corrib gas line off the West of Ireland……….gas field found in 1996, they still haven’t managed to get the pipe line in never mind get any gas ashore ……..and it’s not looking like anything will get to shore for quite a while……

    This pipe line is proposed for one of the least populated areas of Ireland….and would bring enough natural gas ashore to heat every building in Ireland for the next 30 years……..and save us billions as a country (read lower taxes) on what we pay to buy other fuels from other sources…….

    For any that wants to take a look………this is more or less the story so far…


  41. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    It takes years less time to expand refinery capacity than it does to make oil flow. A go ahead today on drilling will do the following:

    1. Crews will be hired for the exploration process.
    2. Ships will be hired, rigged or built from scratch
    3. Steel mills will begin to increase capacity
    4. Surveyors will be hired for land and sea
    5. Large land purchases will occur
    6. Outside suppliers will hired
    7. Rigs will be built using materials purchased from thousands of sources
    8. Refineries will be built using materials from thousands of sources
    9. Pipelines will be built using materials from thousands of sources
    10. Oil prices will have plummeted by this point
    11. Gas prices will have plummeted by this point as well
    12. Taxes will be paid by all those involved in this process
    13. All of the thousands of contractors involved in the process will have photos of every imaginable gizmo and gadget that they have sold to the big mean oil companies and NEED TO GET THEM FRAMED
    14. People all have good paying jobs and are able to MAKE THEIR MORTGAGE PAYMENTS SO I DON'T HAVE TO
    15. The dollar becomes strong and it is cheap to buy #### from China again.
  42. surferbill

    surferbill SGF, Supreme Grumble Framer

    This is a condensed version of an article that was in the Virginian Pilot this morning. They are considering drilling for oil and natural gas off the coast of Virginia.

    Estimated yields of ANWR and our offshore sites would increase international supplies only about 3 percent, shaving just 13 cents or so off a gallon of gas, and not for another decade at the earliest.

    Oil is an international market item, so no company will sell us our oil for less than the worlds going rate.
    OPEC Cartel nations could, and probably would, keep the price up just by lifting a little less oil themselves.

    Oil is a they-win you-lose game.

    We could create huge new supplies, in effect, by conservation, a barely tapped resource, which the Bush White House mocked and disdained.

    We can hurry already existing alternatives to market and accelerate other, promising alternatives by incubating them with tax incentives.

    We must find not more oil, but more ways to use less.
  43. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    Americans don't have a monopoly on stupidity.
  44. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    Let's see if the airlines start reducing fares with the same fervor and speed that they raised them. Airfares have gone sky high, with Southwest leading the way.
  45. rsee

    rsee CGF II, Certified Grumble Framer Level 2

    I don't know

    I don't know if this is going to happen, Paul. According to Forbes, Southwest is supposed to post it's earnings statement tomorrow. They say that the airline probably will post a "modest" profit, as it had hedged it's fuel costs (70% of them) at $51/barrel. This past Monday it was trading at $130/barrel. All this with no mention of lowering fare prices. In fact, according to Bloomberg.com, 7 of the 8 major airlines have posted losses in the past week, and that is AFTER they have CUT a combined 26,000 jobs.

    I'm all for being optimistic, but I don't see this thing turning around any time soon. We just got our natural gas futures predictions for this coming winter and depending on who you believe, here in MN we are looking at 32%-50% increases in our heating costs.

    Ron C
  46. Ylva

    Ylva SPFG, Supreme Picture Framing God

    I completely agree with this. I am someone who really does pay the balance in full (not just faking it) and do not understand you could live any other way. I don't think I would get a good night's sleep with such debts hanging over my head.
    We have several saving accounts (yes, much to the surprise of everyone), our house has been paid off (we paid a small amount extra towards the mortgage every month, against advise of our financial advisor, but hey, we're stubborn and now we are more than happy about it), we have a pension plan and we are very careful how we spend our money.

    I know, from day to day, how much we owe, how much is left to spend and how much has been set aside.
    We never spend more than we earn.
    It doesn't take a lot of time; it does take discipline. Somehow most people lack that quality.
  47. Ylva

    Ylva SPFG, Supreme Picture Framing God

    I have to giggle a little here.....
    I moved to the US 15 years ago, coming from Europe. (Holland)
    Are you aware that most people there pay $8 or more for a gallon?(translating the euros/liters into $/gallons)
    True, they drive smaller cars but they pay far more in taxes than we do. And just the price of a small car.....the average is about 40% more than what we would pay here. Almost no-one has two cars in their household. Lots is done by public transportation (and that is expensive too) or just take a bike and use that for transportation.
    Yes, it's a different way of living, I know, and not realistic for the US.
    But, a lot of people drive cars in Holland, there hasn't been a decline in traffic, in fact, there has been an increase in the amount of cars on the roads in the past 5 years.
    The gas price is up, the taxes are up and still people won't leave their cars.
    If I look at their cost of living and here, I don't think we are that badly off.
  48. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    We are a somewhat spoiled society. European house are also much small than the typical American house.
  49. Paul N

    Paul N In Corner

    Oil has dropped from a high of $146 to $120ish the last 2 weeks. Did anyone see an immediate drop at the gas pump?

    Conversely, the price at the pump goes up the almost same day the oil goes up.
  50. couture's gallery

    couture's gallery PFG, Picture Framing God

    Ylva..right on..we also pay every card in full each month..also we paid off our house 15 yr mort in 6 years, and we paid off our store 15 year mort. in 5 years.
    Watching every penny and spending what you can afford is hard to do with all the temptation out there, but it pays off big time if you have the disapline to do it. We also have over 100,000 in IRA's and two significant savings accounts .

    I do not feel bad for those people who tried to flip houses and propetry and got in over thier heads...they got caught up in the law of averages. I do not feel bad for the guy making 50,000 a year and has to have a new SUV, a new boat, a new RV, etc etc and finances the h*** out of all of them. this is the root cause of the mess we find our economy in now....the whole country can't live beyond their means forever, as we are now learning.
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