Think $3.00 Gas Is A Good Thing?

"Einstein On Common Sense"

http://paxonbothhouses.blogspot.com/2014/10/einstein-on-common-sense.html

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$3 a gallon is a bad sign for the economy

There are already signs that gasoline prices, which have fallen to their lowest level in the past six years, are making it easier for Americans to get by. The sudden, 20 percent decline in gas prices has saved the average person $520 since June, and people are putting that extra money to use. Wal-Mart said last week that its quarterly sales had increased for the first time in nearly two years, and other retailers are seeing better business, too.

Yes, cheap gas is good for the economy, but in the same way that all those empty seats at FedEx Field are good for Redskins fans: the fact that it's easier to get a ticket isn't much consolation for a 3-7 record.

Likewise, falling gas prices aren't exactly cause for celebration. It is true that they're partly a result of fracking, which has made fuel more readily available in the United States, and the response of Saudi Arabia and the other oil-exporting states, who are nervous enough about American drilling that they're not jacking up prices, as they might have done in the past. These are good things (serious environmental worries aside), and they've created a worldwide glut of oil.

What's worrisome is that no one is buying all that oil.

The unfortunate truth is that low prices for gasoline are a symptom of a sickly global economy. It isn't just gas prices that are falling as consumers make do with less and businesses put off new investments in Europe, China and Japan. Metals such as copper, silver and platinum are cheap, too, and so are crops likecorn, soybeans and wheat.

If prices continue to fall, the economy could be in real danger, because there won't be much central banks can do to encourage spending with interest rates already at or near zero in most of the world. Lower prices might be good in themselves, but it's what they reveal about the way things are headed that's cause for concern.