We're not at the pain threshold yet...
Just some randomish thinking...
Oil is above $56.00 a barrel, but not everybody is in pain yet. I saw an SUV parked outside of a 7-Eleven with the engine running. The driver was nowhere to be seen.
Eventually, I think we'll see it in phases. At some point, people will begin to shut their engines off when stopped for any length of time. And at another pain-point, they won't be going to 7-Eleven, in favor of less-expensive shopping alternatives.
What's your pain threshhold? At what point do you begin to hurt? I think most people think in terms of "tank price." Miles per gallon and dollars per gallon are not really "real" to most people. But filling up a Ford Excursion's 44 gallon tank of gas at $2.03 will cost you $89.32.
Now that's REAL money!
At $2.55 (where gas is in some states), that same tank will cost you $112.00 . Does that hurt yet?
One day, when (yeah, WHEN, not "if") gas costs $4.00 a gallon, that same Excursion will require $176.00 to fuel. Feeling a twinge of pain now?
What is a typical Excursion driver's pain threshold, I wonder?
And is my theory feasible? Is there a "shut the engine off" pain threshold, and a later "sell the gas-guzzler" threshold yet to come?
Of course, this may be a moot discussion. Most economists know that from oil comes ...well, EVERYTHING. Any sustained increase in the cost of oil will drive up costs of EVERYTHING. It's like an unavoidable tax increase, or the raising of interest rates; it makes EVERYTHING cost more, not less.
Eventually, the economy must accomodate this "taxing" cost, or the economy will contract accordingly.
Contraction means bad things for people who have to WORK for a living. I wonder, does the average Excursion driver work for a living? I can't imagine that they're all independently wealthy, can you?
Okay, now my brain hurts. It's either too much thinking, or not enough coffee. Give this some thought while I go make a cup...