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Obamanomics: Inflation

- May 16, 2011

Inflation Surges Thanks To Rising Gas Prices, Hitting Americans In The Pocketbook, While Obama’s Policies Exacerbate The Problem

“Inflation Accelerated To Its Fastest Annual Pace In Two And A Half Years In April, As Surging Gas Prices Continued To Hit American Consumers.” (Annalyn Censky, “Inflation Rises At Fastest Rate Since October 2008,” CNN Money5/13/11)

INFLATION SURGES CAUSING AMERICANS TO CUT BACK ON SPENDING

“With Rising Prices On Everything From Big-Ticket Items Like College Tuition To Food And Gas, Consumers ‘Feel They Don't Have Any Safe Ground To Stand On,’ Barone Notes.” (Nina Easton, “Inflation: Poison For Obama In 2012,” CNN Money5/9/11)

Rising Gas Prices Are Changing Consumer Habits And Causing Families To Cut Back On Spending. “The poll found 62 percent of Americans had reduced the amount of driving they did because of gas prices and 68 percent had cut back on other expenses. Nearly half, about 45 percent, had changed their vacation plans to stay closer to home. The rising cost of driving is hitting the U.S. economy. U.S. retail sales rose modestly in March as auto sales plunged and consumers stretched to pay for pricey gasoline.” (John Whitesides, “High Gas Prices Hurting Confidence, Changing Habits,” Reuters, 4/13/11)

42 Percent Of Americans Are Cutting Back On Groceries To Pay For Gas. “U.S. shoppers are also increasingly cutting back on grocery spending as they spend more at the pump. More than 42 percent of the 1,000 surveyed said they curtailed spending in the grocery aisles of retailers.” (Dhanya Skariachan, “Americans Buy Less Food As Gas Prices Rise: Survey,” Reuters5/12/11)

  • “‘When You Got Numbers Like That, That's Not Good For The Economy,’ Beemer Said.” (Dhanya Skariachan, “Americans Buy Less Food As Gas Prices Rise: Survey,” Reuters5/12/11)

If Gas Prices Hit $4.50, Americans Will Go Into “Retail Shock Mode” Where There Are Major Cut Backs On Everything Except Essentials. ‘My biggest worry is if gas prices hit $4.50 and $5, I think you are going to put America into literally a retail shock mode where consumers are going to start cutting back on everything other than household essentials,’ Beemer said. (Dhanya Skariachan, “Americans Buy Less Food As Gas Prices Rise: Survey,” Reuters5/12/11)

AND PUTTING ANY HOPES OF ECONOMIC GROWTH ON ICE

Inflation Could Make The Weak Economy Even Weaker. “Today, raising interest rates might make a weak economy even weaker, stifling what meager growth there has been in wages.” (Neil Irwin, “Inflation Inflicting Pain, As Wages Fail To Keep Pace With Price Hikes,” The Washington Post, 5/9/11)

  • And Make The “Massive Budget Deficits” Even More Expensive. “Moreover, higher interest would make the nation’s massive budget deficits even more expensive to finance, taking an additional toll on the economy.” (Neil Irwin, “Inflation Inflicting Pain, As Wages Fail To Keep Pace With Price Hikes,” The Washington Post,5/9/11)

Falling Retail Sales Doesn’t “Bode Well For The U.S. Economy” Since Consumer Spending Accounts For Over Two Thirds Of The Economy. “The findings don't bode well for the U.S. economy, which struggled to gain momentum early in the second quarter, with retail sales posting their smallest rise in nine months in April. Consumer spending accounts for more than two-thirds of the U.S. economy.” (Dhanya Skariachan, “Americans Buy Less Food As Gas Prices Rise: Survey,” Reuters5/12/11)

Since “Inflation Has Come From Dollar Depreciation… It Will Cause The Economy To Slow.” “‘The Fed wanted higher inflation, but they should be careful what they wish for,’ said Chris Low, chief economist at FTN Financial in New York. ‘Because so much of the inflation has come from dollar depreciation raising costs, it will cause the economy to slow.’” (Lucia Mutikani and Pedro Nicolaci da Costa, “Import, Small Business Data Point To Inflation,” Reuters5/10/11) 

WHILE OBAMA’S ENERGY POLICY WILL ONLY PUSH GAS PRICES HIGHER

Gasoline Prices Have Doubled Since Obama Took Office. “Feeling pain at the pump? Gas prices have doubled since Mr. Obama took office.” (James S. Robbins, “Gasoline Up 100% Under Obama,” The Washington Times’ “Water Cooler” Blog, 3/30/11)

Sen. Obama In 2008: “[O]bama Suggested That The Main Problem With High Gasoline Prices Is Their Rapid Rise, Not Their Total Of About $4 A Gallon.” (Charles Babington and Jim Kuhnhenn, “One Down, More To Go For Republicans Aiding McCain,” The Associated Press, 6/12/08)

Obama Thought That Americans Could “Adapt” To Higher Gas Prices. “But if the government gives middle-class families tax cuts and encourages the market ‘to adapt to these new circumstances more quickly, particularly U.S. automakers, then I think ultimately, we can come out of this stronger and have a more efficient energy policy than we do right now.’” (Charles Babington and Jim Kuhnhenn, “One Down, More To Go For Republicans Aiding McCain,” The Associated Press, 6/12/08)

  • And Obama Wasn’t Concerned That Cap-And-Trade Would Have Boosted Consumer Energy Prices, He Boasted That: “[U]nder My Plan Of A Cap And Trade System, Electricity Rates Would Necessarily Skyrocket.” (Sen. Barack Obama, Interview With San Francisco Chronicle Editorial Board, 1/17/08)

Obama’s Anti-Drilling Policies Will Result In A Loss Of 375,000 Barrels Of Oil Per Day This Year. “[T]he Obama administration stopped awarding permits for deep-water drilling until late February. The drilling suspension, along with a new, slower permitting process, will result in the loss this year of about 375,000 barrels of oil a day, according to energy consultancy Wood Mackenzie. That is roughly equivalent to one-third of the production in Libya that remains shut down because of political turmoil there.” (Angel Gonzalez, “Spill's Toll On Oil Output Grows Clearer,” The Wall Street Journal4/20/11)

Obama’s Dragged Out Policies On Approving New Drilling Permits Essentially Created A “Permatorium.” “In the months after lifting the ban, the administration slowed drilling permits to a crawl, effectively creating what some have called a ‘permatorium.’ Dismayed by the delays, in February U.S. District Court Judge Martin Feldman tried to force the administration to act on seven pending permits, calling the inaction on permits ‘increasingly inexcusable.’ Permitting has picked up recently, thanks in part to increasing political pressure, but remains far below pre-spill levels.” (Joseph Mason, Op-Ed,  “Time For A Cease-Fire In The War On Oil,”The Wall Street Journal4/25/11)

In December 2010, The Obama Administration Moved Beyond The Gulf And Banned Offshore Oil Drilling Along Most Of The U.S. Coastline. “Interior Secretary Ken Salazar announced Wednesday afternoon that the Obama administration will not allow offshore oil drilling in the eastern Gulf of Mexico or off the Atlantic and Pacific coasts as part of the next five-year drilling plan, reversing two key policy changes President Obama announced in late March.” (Juliet Epstein, “Obama Administration Reimposes Offshore Oil Drilling Ban,” The Washington Post, 12/1/10)

Obama Wants To Get Rid Of Domestic Energy Production Incentives. OBAMA: “I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies.” (President Barack Obama, State Of The Union Address, Washington, D.C., 1/25/11)

  • Rep. Dan Boren (D-OK) Warned President Obama That Repealing Domestic Energy Incentives Will Kill Jobs And Reduce Energy Production. BOREN: “We lose thousands of jobs not only in Oklahoma, Texas, Louisiana, Arkansas, and places like Pennsylvania, New York, West Virginia. These aren’t just traditional oil and gas producing states. And these tax breaks do not go to the big, major oil companies. They go to small independent companies, like we have in Oklahoma.” (Fox News’, “Your World With Cavuto,” 4/27/11)
  • Eliminating Domestic Energy Incentives Will Hurt Independent Producers, Who Drill 95 Percent Of The Nation’s Natural Gas And Oil Wells And Account For 67 Percent Of Total U.S. Gas And Oil Production. “Barry Russell, president and CEO of the Independent Petroleum Association of America (IPAA), said that Obama's tax proposals ‘do not target 'Big Oil,' but instead go after 18,000 American independent oil and natural gas producers, who on average employ only 12 workers. ‘American production activities are dominated by these independent producers who drill 95 percent of the nation's natural gas and oil wells, accounting for 67 percent of total U.S. natural gas and oil production.’ A tax increase will cut investments, Russell said.” (Charles J. Lewis, “Obama: Curb Tax Deal For Big Oil,” Times Union [Albany,NY], 4/27/11)

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