In Sept. of 2008, gas prices reached a median record high of $3.84 per gallon, peaking just before the economic crash and credit crisis in the economy and banking system. Two years later, as the recession hit full steam in the U.S., and oil prices dropped down to $35 a barrel, the price of a gallon of gas had fallen back under $2.50.
However, since reaching that bottom in 2010, gas prices across the country have been climbing steadily higher, even as fuel consumption by most Americans has remained low. Now, just two years later, these same economic indicators are mirroring those of 2008 , and gas prices on Sept. 1 are once again nearing record highs, foreshadowing a potential new economic crash.
AAA said the national average price of gasoline was $3.83 per gallon Saturday, a decline from Friday, but still a record high for a Labor Day weekend.
The record Labor Day weekend pump price is a sharp increase from the previous high for the holiday, which was $3.67 per gallon in 2008, the year crude oil prices set a record high in July above $147 per barrel.
CNN reported Saturday that the average price of gasoline jumped 9.4 percent in August, the largest monthly climb in more than three years. - UPI
On Friday, oil prices, along with other commodities, rose on the outlook given by Fed Chairman Ben Bernanke following his speech in Jackson Hole, Wyoming. In Aug. of 2008, Chairman Bernanke gave a similar speech regarding systematic risk, that would become a self-fulfilling prophecy for the economy a little over a month later.
Contrary to government, or Federal Reserve analysis, the economic landscape, both in Europe, and in the U.S., has not improved beyond minor fluctuations upward after vast amounts of quantitative easing programs. GDP projections for 2012 have increasingly been lowered, with estimates by Goldman Sachs and other investment banks focusing on numbers below 2% growth. Consumer spending, which makes up nearly 75% of our entire GDP, is falling so much that GM had to shutdown some automobile plants due to excessive inventories, and lowered demand.
There are a number of legitimate reasons for gas prices being higher going into labor day weekend, especially with recent fires occurring at two refineries, and oil drilling shutdowns due to Hurricane Isaac, however, these events do not account for the decrease in consumption by many Americans out of work, and those taking fewer trips on the nation's highways. Thus the primary catalyst for near record gas prices is inflation.
The Federal Reserve, along with Congress, spent a vast amount of resources staving off complete economic collapse in 2008. Yet four years later, neither agency has these tools available in case of another market crash since interest rates have remained near zero for over four years, and the national debt has increased to where America now owes more than our annual GDP.
With bank runs taking place all across Europe, and analysts like Peter Schiff and Jim Rogers projecting economic collapse occurring very soon, the entire global economic system stands on the edge of a cliff, and the lifeblood of all industry, that of oil and gasoline, are foreshadowing a repeat of the economic crash that encompassed the West just four years ago.