Oil Recession, gasoline costs the Average Family $51.89 per gallon

Chapter 10 Part Three

Gross Domestic Product should measure the economic health of a country. In our country, the gross domestic product, or GDP, exceed $13 trillion dollars. Up to 20 percent of those dollars pay for the purchase of gasoline and crude oil, going by my figures. GDP figures or my home grown figures do not measure the underlying social health of a country. No system currently measures that in a way which would be comparable to GDP measuring raw economic numbers.

We need an index which stands alone from GDP, unemployment reports, and consumer satisfaction. An index that measures something almost intangible. The specific question to answer would be, "How is the social core of the country doing?"

"How are you doing?" isn't that the rather vague question asked in passing by co-workers and casual acquaintances? Our casual acquaintances, nearly complete strangers in fact, don't want to know our personal complaints. Those complaints are private and should remain private.

Without divulging private information, we already have humble tools to determine, "How well the social core of our country is doing with an oil recession hitting us."

I have not defined an oil recession. Let's make it simple. When the total being spent on a single commodity, oil, increases faster than the normal GDP growth rate, and at such a huge rate as to displace all other growth, we have a commodity recession. Today, it's oil so I have called it an oil recession.

Crude Oil purchases have gone from 1.5 percent of the GDP figures to 7.5 percent of GDP totals.

Since the actual compiling of GDP figures are beyond my explanation here, I've simplified it.

The economy, using only GDP figures, has grown about 3 percent. In dollars, it means our country and its hardest workers, have increased production by $413 billion dollars.

In 2006, Crude oil sales increased $453 billion dollars over the early 2002 sales.

Using my crude estimates, our GDP contracted $50 billion dollars.

Crude oil sales could exceed one trillion dollars in the coming calender year while total GDP growth is expected to be just barely growing. Any and all growth in the GDP numbers will be entirely driven by the purchase of one single commodity. Crude Oil.

I've used some figures for the total of gasoline sales. How is the core of our society doing since this product hit $4 per gallon?

In 1999, our personal taxable income for our country was $4.1 trillion dollars and the price of gasoline about $1.29 per gallon. The annual sales of all grades of gallon exceeds 300 billion gallons a year. The total of all petroleum products exceeds 800 billion gallons. But, we are only concerned with the volume at retail of gasoline, all grades. So, $27 billion dollars of pre-tax income went to the purchase of gasoline. About one half of one percent of all pre-tax dollars went to purchase gasoline.

In 2008, projections indicate that $93 billion will be spent on the purchase of gasoline with pre-tax dollars. About 2.2 percent of pre-tax dollars will be spent on gasoline.

A predictable increase since gasoline prices went from $1.29 to $4.15 a gallon, almost a 400 percent increase.

But, to measure how the core is surviving this change, we want only core income after taxes to gasoline sales.

Not the total of all income before taxes and total gasoline sales.

Most readers already know how unfairly American capitalism distributes income. Just about 2/3s of all American earned $1.879 trillion before taxes in 2005, the best information at this time. So, adjusting as best we can, total gasoline sales were 20 percent of the core income before taxes. That's just the best estimate based on projections at $4.15 per gallon.

In 1999, roughly 2/3s of all Americans earned $1.4 trillion and total gasoline sales were $27 billion. Those billions spent on gasoline were only 1.9 percent of pretax dollars.

So, I've wasted a lot of time and energy to show that gasoline sales have hit the core of our society much harder than the whole of our society.

For the other third of our society, gasoline sales will be 1.6 percent of income in the next 12 months.

Our core is suffering an commodity recession that isn't measured by GDP or typical recession measures.

One third of our society is paying 1.6 of income for gasoline and the two thirds core is paying 20 percent of pre-tax dollars for gasoline. Our core is experiencing gasoline prices equal to $51.89 cent per gallon.