A Metric from 2008 worth Paying Attention To
By Guest Columnist Armada Executive Intelligence


Remember 2008 when oil prices hit a recorded high of $147 a barrel? There was a metric that was circulated then that has resurfaced, and we think it is important to keep in the back of your mind. The most conservative view of gasoline prices suggests that a penny increase in the price of gasoline at the pump costs US consumers and businesses $4 million a day (per penny). We did the math, and the current situation would look like this for the last three months alone: starting with a regular price per gallon of $2.72 on Gasbuddy.com on September 22nd and working through to roughly $3.00 a gallon on December 22nd, business and consumer would have diverted $7.968 billion in spending from other types of purchases to fuel cost-related expenditures. Of course, there are some skeptics that don’t believe this math works in a real sense – and there are just as many that will tell us that the impact is much worse than this (because of the impact of consumer psychology on spending practices). We believe the impact to be somewhere in between on a street level basis. As we think back to 2008 and the relative impacts across the board, it did have a material effect on consumer spending. The situation is starting to capture more international headlines – and is something to factor into risk analyses for January. The Truck Blue Book® is working to bring subscribers a full daily economic update, from our partners at Armada Corporate Intelligence.


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