By on May 9, 2008

6a00e54ef6fd3b883400e54f8b41758834-800wi.jpgWho do you think is doing the greatest damage to the US dollar? The Chinese? The European Union? OPEC? Brace yourself – it's you, every time you press the gas pedal on your gas-guzzler. With today's oil prices, US oil imports represent $1.5b per day leaving the country — make that $548bn per year. "This represents the single largest contribution to America's balance-of-payments deficit, and is a leading cause for the dollar's ongoing drop in value," writes Michael T Klare, author of "Rising Powers, Shrinking Planet," over at Tomdispatch.com. Hindsight is 20/20, but things would have been a lot different if the automakers had realized where things were headed, when things were headed that way. Meanwhile, motorists unlucky enough to be stuck with land barges are seeing second-hand values take a torpedo in the bow. Yes – gripe, gripe, gripe. But this is serious. If T. Boone Pickens is right, the price of oil is going Polar North, which means the dollar is headed for the antipodes. Klare thinks the yearly US tab for gas could easily reach three quarters of a trillion dollars soon. Do the patriotic thing. Go easy on the pedal, will you?

Get the latest TTAC e-Newsletter!

47 Comments on “What Gas Hogs are Doing to America…...”


  • avatar
    USAFMech

    I leave my 12 year old XJ6 in Sport mode all the time. Just doin’ my part.

  • avatar
    Ralph SS

    I KNEW it was my fault.

  • avatar
    KixStart

    The authors of
    A Solar Grand Plan
    figure it could be a reality for $20 billion a year for the next 20 years. A comparative drop in the bucket. Put some more money into EV encouragement and, in a few years, we’d be able to put a dent in that deficit.

    Pay for the programs with a carbon tax and all the pieces for a green future, with good jobs and a more reasonable trade deficit fall into place.

    By the way, the $548 billion figure makes Minnesota’s wrangling over a 5 to 10 cent per gallon increase in the gas tax look awfully silly.

  • avatar
    dolo54

    I’m seriously considering converting a good portion of my savings to euros.

  • avatar
    NICKNICK

    I thought we had the Federal Reserve act of 1913, Nixon’s nixing of the gold standard, and Greenspan’s use of the Fed as a printing press to thank for dollar devaluation.

    After all this time I find out it was me after all.
    Sorry, guys; my bad.

  • avatar
    geeber

    Yawn…in the 1980s it was the flood of Japanese cars that were going to force us to mortgage the country to those smarter, harder working Japanese.

    In the 1970s, the first two energy “crises” were going to result in a takeover by Arab sheiks.

    In the 1950s, the threat came from within – rock ‘n roll and steamy movies were going to weaken America and make it ripe for a communist infiltration.

    I guess this is the threat du jour that will keep the chattering classes occupied for at least this year…

    Although if Mr. Klare really believes that, “America’s wealth and power has long rested on the abundance of cheap petroleum,” he needs to learn some history.

  • avatar
    ash78

    I treat my go-pedal like an on/off switch!

    dolo54
    When the Euro was around 82 cents, I searched far and wide for a bank that would cheaply allow me to buy them and deposit them (or just hold them in a safe deposit box). No dice, since they all catered only to the $100k+ crowd and didn’t want the hassles of small depositors.

    Now I’m heading to Europe in 3 weeks with the Euro at nearly double that price. Good times.

  • avatar
    bluecon

    So the environmentalist have stopped the USA from drilling for and producing the huge offshore and Alaska oil fields and prevented the building of nuclear, hydro or coal production of energy while foisting the ethanol scam on the public. And you wonder why you have really expensive offshore oil?

  • avatar
    i6

    The only validity in the claim that fuel consumption is causing the plunge in value of the greenback is that it takes a lot of fuel to fight a war.

    The dollar sharply and solidly reversed it’s upward trend in February 2002, immediately following the Cheerleader in Chief’s State of the Union address introduced the world to the concept of an Axis of Evil. Speculators understood exactly the consequences of that statement and the buck never looked back since then.

  • avatar

    Right on the heels of this article:

    Autoblog has announced that Hyundai has decided not to bring the unibody pickup idea to fruition.

    Here.

    Possibility of 24 mpg gas mileage, with the truckish body that Americans desire, and naturally we won’t get it. Thanks Hyundai.

  • avatar
    AKM

    I’m seriously considering converting a good portion of my savings to euros.

    Already done! As I hold french citizenship and live in the States, I have bank accounts in both countries, and have been saving most of my money in euros over the last 2 years. Most of my retirement money is in dollars, but it may well have come back from its hole in about 30 years.

  • avatar
    gzuckier

    huge alaska oil fields:

    “It is expected that the price impact of ANWR coastal plain production might reduce world oil prices by as much as 30 to 50 cents per barrel [in 2025].” -2004 Congressional “Analysis of Oil and Gas Production in ANWR” http://www.eia.doe.gov/oiaf/servicerpt/ogp/pdf/sroiaf(2004)04.pdf
    (Note to rightwingers and other math-challenged: a barrel being 42 gallons, that’s about a penny a gallon)

    yeah, that’s gonna fix everything!

  • avatar
    Mj0lnir

    @ gzuckier-

    If the problem is our buying power collapsing in relation to other currencies, and the cause is our propensity to send dollars overseas, then why would keeping dollars here by buying products originally priced in dollars not be useful?

    Why is taking aim at “the single biggest contributor to balance of payments deficit” while spending money here bad?

  • avatar
    CSJohnston

    Only in America is a low dollar seen as a disaster. It may be, but only to part of the national economy.

    Let’s see, a cheap dollar results in greater competitiveness abroad and a competitive advantage for home-based industries to produce goods and services for export and domestic consumption.

    Europe, South America and Asia have long leveraged their lower-valued currencies to import their goods into the U.S. A smart, angry American bear would start to turn the tables around and start remembering what got it into global predominance in the first place, an exporting-based economy.

    Meanwhile we in Canada (the Western Half anyway) will help pick up the slack with our way overvalued petrodollars and buy fire sale real estate in the Sun Belt.

  • avatar
    menno

    The budget deficit due to sending megabucks overseas to the oil exporting nations can’t be helping matters, but a lot of the problem is our American propensity to spend like there’s no tomorrow, and borrow in order to be able to spend.

    I mean that on a personal basis, as well as a national basis.

  • avatar
    mdf

    i6 wrote:

    The only validity in the claim that fuel consumption is causing the plunge in value of the greenback is that it takes a lot of fuel to fight a war.

    According to Klare, the US military is chewing through 340,000 bpd.

    http://www.tomdispatch.com/post/174810/

    Consider this in the context of the 20,000,000+ bpd the entire country devours.

  • avatar

    Have a look at this article in Friday’s USAToday:
    http://www.usatoday.com/money/autos/2008-05-08-suvs-resale-value_N.htm

    Resale values of SUV’s are plummeting; look at the housing stat’s, people are trying to get rid of houses at the end of long commutes; check out which cars are selling.

    All of this will become a Tsunami soon, as consumers decide that they just have to move to get in front of everyone else.

    And the oil market isn’t doing us a favor. Touching $126/barrel today – an unbelievable price a year ago.

  • avatar
    i6

    mdf:

    Thanks for clarifying, I didn’t mean to say that the claim is valid, even though I did.

    The point was rather that the massive federal debt caused by overspending (in this case for the war) is the reason for the decline in the dollar.

  • avatar
    ihatetrees

    Stein X Leikanger :
    Resale values of SUV’s are plummeting; look at the housing stat’s, people are trying to get rid of houses at the end of long commutes; check out which cars are selling.

    On the other hand, the lower costs of large trucks (especially used) does take some sting out of the total cost of ownership. Save $8K on the cost of a truck, that’s ~2000 gallons of fuel. At 15MPG, that’s like getting 30,000 free miles…

  • avatar
    JTSParts

    I think I should know better, but does anyone here know anything about hydrogen enhancement? I have been reading about it and it seems like it could possibly work…

  • avatar
    geeber

    Stein X. Leikanger: …look at the housing stat’s, people are trying to get rid of houses at the end of long commutes

    I’m curious – do you have a site for this? Yes, the housing market is hurting, but that is because housing values have been artificially inflated over the past 4-5 years. Housing values are falling EVERYWHERE, even in inner-ring suburbs and central city locations.

    If housing values are falling faster in the exburbs, that is because the newest houses are located there, and a fair number of them were built on speculation of ever-increasing demand. The builders gambled that there would be buyers for the completed houses, and they lost that bet.

    Most housing in older suburbs located near central cities isn’t new – someone already lives there. So those areas haven’t been hit as hard. Someone already lives in the house, so it isn’t completely worthless. But housing values are falling in those areas, too. Check out what is happening to the value of new condominiums in center city areas, which are about as close to employment as one can get without living in the office.

    This collapse in demand is the result of tightened credit standards, which are bringing back some (much needed) sanity to housing prices.

  • avatar
    improvement_needed

    The Luigiian:
    What’s wrong with Hyundai deciding to cancel bringing a 24mpg personal transportation vehicle to the US? 24 mpg is rather ‘pathetic’ for personal transportation…

    as to the original post:
    how about: Do the patriotic thing. Switch to a rotating pedal (ie: bicycle)…

    also, why do trucks and suvs and cuvs etc… get all the blame…
    why don’t we start blaming V6 sedans…
    There’s nothing you need a pontiac G8 (v6 or v8) to do that a 4 cylinder camry, accord, sonota or malibu can’t…

  • avatar
    bluecon

    gzuckier

    “huge alaska oil fields:

    “It is expected that the price impact of ANWR coastal plain production might reduce world oil prices by as much as 30 to 50 cents per barrel [in 2025].” -2004 Congressional “Analysis of Oil and Gas Production in ANWR” http://www.eia.doe.gov/oiaf/servicerpt/ogp/pdf/sroiaf(2004)04.pdf
    (Note to rightwingers and other math-challenged: a barrel being 42 gallons, that’s about a penny a gallon)

    yeah, that’s gonna fix everything!”

    I think only lefty enviros can figure out how not drilling for the huge amounts of known available oil, or not developing nuclear or other power sources will have no affect on the price of energy.

  • avatar
    mdf

    JTSParts: hydrogen enhancement? Some kind of fuel-cell stuff?

    Do not wait for space alien technology to save us all. Cargo cults are for losers!

    Go buy a hybrid or other fuel efficient car.

    Do it today, if you can.

  • avatar

    JTSParts

    If you are referring to the HHO kits or other things various websites are peddling to increase your car’s mileage, they are pretty much universally bunk.

    The only kits that do work cost many hundreds to a few thousand to buy & install, and are very difficult to install, hard to tune and nearly as hard keep tuned.

    If you want to save money buy a hybrid or a smaller car, and drive it very conservatively.

  • avatar
    mdf

    i6 wrote:

    The point was rather that the massive federal debt caused by overspending (in this case for the war) is the reason for the decline in the dollar.

    It’s incredible, isn’t it? The 340,000 bpd that the military consumes maps to about 10 million cars in the USA. If the government simply confiscated those 10 million cars, and then gave the owners a new hybrid:

    10,000,000 x $30,000 == $300 billion

    which is half of the current yearly DoD budget. While this isn’t entirely rational, it isn’t completely insane either:

    http://www.swivel.com/data_sets/show/1001569

    Fortunately, normal market forces will probably do the same thing (though on a longer timeline). Very good news indeed:

    http://www.greencarcongress.com/2008/04/california-gaso.html

    Ford, GM, Toyota and the rest of them need to get off their butts and produce.

  • avatar
    Mj0lnir

    improvement_needed :
    May 9th, 2008 at 12:40 pm

    There’s nothing you need a pontiac G8 (v6 or v8) to do that a 4 cylinder camry, accord, sonota or malibu can’t…

    There’s nothing the quadruplets above can do that a Corolla/Civic/Elantra/Cobalt can’t.

    Demanding that people buy on “need” is a very tricky proposition. I “need” to enjoy my car, and I “need” to feel like I’m not sending money overseas, and I “need” the Walter Mitty fantasy that I could powerslide my daily driver through the Corkscrew, so I “need” a G8 GT that gets almost as good mileage as a Camry XLE V6.

    Unless, of course, we let you dictate what everybody else “needs”.

    Then I guess I need a Civic EX, and I can spend the money I save on therapy after spending hours in a slower, uglier car that I hate with a passion.

  • avatar
    improvement_needed

    Mj0lnir:
    agreed. there’s a fine line between free markets and self-destructive markets…

    though i would vote that [right now] 4 cylinder ‘large’ cars are smaller than the 4 cylinder mid-size [compact] cars you listed…

    as for slower: I’d say that if you cannot drive a 4 cylinder civic ex with the same speed and handling of your current ride (whatever that is), then either:
    you track your daily driver
    you tow a trailer
    you need to improve your driving skills
    you current drive in a manner that is reckless / dangerous for both yourself and fellow drivers on north american roads…

  • avatar
    geeber

    i6: The point was rather that the massive federal debt caused by overspending (in this case for the war) is the reason for the decline in the dollar.

    Actually, no…in the grand scheme of federal spending, the costs of the Iraq War are, relatively speaking, a drop in the bucket.

    Medicare, Medicaid and Social Security account for almost 50 percent of federal spending. All three are growing, and will continue to grow as the Baby Boom generation retires.

    To show how entitlement spending has grown, examine growth trends of the two largest programs – Social Security and Medicare. According to the Budget office of the U.S. government, in 1970 together they made up 18.7 percent of the 1970 budget. By 2006, these two programs made up 33.3 percent – almost double the 1970 figure.

    So, if you are really concerned about federal spending, I’d suggest forgetting about the Iraq War (which can be ended with the U.S. withdrawal from Iraq). Focus on entitlement programs, which are a much more stubborn source of spending growth, and are likely to become even more expensive in the future.

  • avatar
    geeber

    improvement_needed: there’s a fine line between free markets and self-destructive markets…

    I’m sure that “self-destructive” market is a code term for “large numbers of people thinking on their own and making choices different than I would make, and that I don’t like.”

    Which doesn’t make their choices wrong or self-destructive – just not the type that you would make.

  • avatar

    24 mpg is rather ‘pathetic’ for personal transportation…

    It’s far better than people get in their F-150s.

  • avatar

    @geeber

    Quite a lot of info on housing values falling faster with longer commutes. Doctorhousingbubble.com has touched upon this, as well, with data.

    Check out entries under this google search:

    http://www.google.com/search?q=housing+values+dropping+long+commutes&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

  • avatar
    geeber

    Stein: They all quote the same article – the one on NPR.

    Here is a quote from yesterday’s The Philadelphia Bulletin on the Center City condo market:

    For months, the high-rise condominium boom that increasingly painted the Center City skyline with countless luxury units has continued to steam ahead, even as problems in the national housing and credit markets bogged down other housing sectors.

    But now, after years that saw developments sprout up faster than rooms could be sold, Center City’s high-rise boom seems to be slowing. Projects have been quietly canceled or delayed, and with a glut of units on the market, more and more realtors see at least a temporary slowdown in the works.

    Which contradicts the quote from the NPR article on Philadelphia:

    “Philadelphia was losing downtown housing and in-town housing until very recently,” Goldberg said. “And now that’s the hottest part of their market.”

    It’s not so hot anymore, apparently…

    The NPR article quotes heavily from real estate sources…meanwhile, on the Housing Bubble Blog, I read about condominiums and other center-city housing going for less than the asking price, or sitting empty.

    Are prices falling faster in exurban areas? Sure, because many of those houses are brand new, and thus cannot be withdrawn from the market (unless they become rental properties, or are demolished). Older neighborhoods are filled with homes that have current occupants. If they don’t sell, the owner can withdraw them from the market (unless the owner HAS to sell), thus preventing a sale that would drive down average values.

  • avatar
    i6

    geeber:

    Social security expenses (and the like) had been anticipated for a long time, while military expenditures were not so well known given the new administration and the events of 9-11. The “Axis of Evil” speech set the tone for Bush’s policy on military expenditures and triggered the dollar’s plunge.

  • avatar
    ttacgreg

    geeber,

    Please ponder this possibility. What is so wrong with domestic entitlements? That money is spent(I’d say invested) on our selves, our society. The money stays here, and stays in the hands of We The People.
    Money spent for the military is lost into the pockets of corporations who profit from war and “defense” spending.
    In my opinion, the USA needs to model itself after Switzerland, rather than imperialist empires like ancient Rome. Historically, empires self destruct. Current trends in the USA clearly are leading to our delcine. The USA has enemies because we pick fights, and have our military based in over 100 countries around the globe. We invade soveriegn counties based on false premises, and have covered two of them in depleted uranium (and I am not talking about Japan). Our president vetoed a bill forbidding torture. The term “blow back” was originally coined by the CIA, not some “Liberal” and it is a reality.
    If I could choose where my tax dollars go, sir, I would choose welfare over warfare, hands down!

  • avatar
    Pch101

    Actually, no…in the grand scheme of federal spending, the costs of the Iraq War are, relatively speaking, a drop in the bucket.

    Medicare, Medicaid and Social Security account for almost 50 percent of federal spending. All three are growing, and will continue to grow as the Baby Boom generation retires.

    The problem with military spending is that it is relatively unproductive. A lot of the cash goes to buying costly equipment that puts money into the pockets of a relatively small number of companies.

    This was not necessarily true in the past, when building massive amounts of military equipment employed more people and cost less per unit. But high-tech results in high prices paid for equipment that was built with less labor, so there isn’t much gain for it.

    Public works would be a better use for it. You not only circulate the cash in the economy locally, but you get infrastructure that you can use, that creates more wealth. Transportation and mobility create affluence.

    Welfare is good if it prevents the alternatives, like food riots and crime. If you want a good case study for what happens when a population is neglected, go search for Marie Antoinette’s head and you’ll find it there.

  • avatar
    Wolven

    What GAS HOGS are doing to America??? How about, What government enabled GREED and Enviros have DONE to America…

  • avatar

    @geeber

    If you’ve already made up your mind, geeber, there’s no point trying to change it. :-)

    Housing values are dropping, but some categories are dropping faster.

  • avatar
    ttacgreg

    Wolven please,

    Just what harm do these dreaded “Enviros” do?

    Might your great grandchildren perhaps appreciate some preservation of the biosphere, might they regret it if their experience of wild animals is rendered to videos of species we doomed to extinction? Do you think they might appreciate the preservation the biological viability of the planet? We are after biological beings. If you think economic collapse is tough, try ecological collapse on for size.

  • avatar
    Pch101

    What government enabled GREED and Enviros have DONE to America…

    I’ve found a way to survive without clean water and breathable air. You must have, too, apparently.

  • avatar

    Don’t forget what those prices support:

    “There are 23 countries in the world that derive at least 60 percent of their exports from oil and gas and not a single one is a real democracy.”
    -Dr. Larry Diamond, Stanford University

  • avatar
    jerseydevil

    Every time I press on the gas pedal I think about the fundamentalist islamic school I am supporting in Saudi Arabia. or the salary of yet another Saudi prince to skip around the world in a puddle of 30 yr old scotch.

    Its amazing to me, as i drive arounf in my 4 cyl golf at the speed limit, all the huge SUV’s flying by me. I guess they dont get it.

  • avatar
    50merc

    “The USA has enemies because we pick fights” sums up marvelously a certain world-view: it’s all our (or the president’s) fault. This thread has officially jumped the shark. Car talk, anyone?

  • avatar
    Landcrusher

    TTACgreg,

    Here is the problem with your theory.

    If you reduce the military past a certain point, history will show that you end up in a war which will then cost more treasure and lives than if you had maintained a proper defence all along.

    Furthermore, history has shown that domestic entitlements lead to high unemployment and lowered productivity.

    There has never been a successful country in the world who used your formula without the protection of a larger power (e.g. USA) that lasted longer than a few decades.

  • avatar
    thoots

    Some perspective on this:

    “There’s nothing the quadruplets above can do that a Corolla/Civic/Elantra/Cobalt can’t.”

    Well, there’s something besides “power to burn” that bigger vehicles — such as “the quadruplets” — have, but the Corolla-class vehicles don’t:

    Comfort.

    I’m like a lot of “old geezers” who want nothing much more than one thing: That eight-way adjustable power seat. Heck, it doesn’t even have to be “powered,” but I’m just totally done with the just-barely-adjustable three-quarter-sized flimsy seats in the small, fuel efficient cars. Many of which aren’t much much more fuel efficient than “the quadruplets” are.

    And “comfort” is a great big reason why “the quadruplets” sell in the numbers they do. This is all part of the discussion we’ve had about “compact hatchbacks” — just add some of the comfort we’ve experienced in the bigger cars, and we’ll bounce down in size.

  • avatar
    Landcrusher

    Thoots,

    You make a great point. I wonder though, that if they some how managed to put all that comfort in the smaller car, whether it would not just hurt the sales of the more profitable larger cars.

  • avatar
    geeber

    i6: Social security expenses (and the like) had been anticipated for a long time, while military expenditures were not so well known given the new administration and the events of 9-11.

    That’s not the point. (And it’s irrelevant if they are anticipated – the key is how they are driving spending NOW and how they will drive it in the future.)

    If the concern is deficit spending, and what is driving said deficit spending, the bigger culprit is entitlement programs. They far outstrip spending on the Iraq War, and they will only get worse in the coming years.

    We can unilaterally exit Iraq next year – for example, if Senator McCain wins, he could have a Nixon-goes-to-China moment and announce a U.S. withdrawal. The expenditures eventually cease.

    By contrast, it’s extremely difficult to cut entitlement spending.

    ttacgreg: Please ponder this possibility. What is so wrong with domestic entitlements? That money is spent(I’d say invested) on our selves, our society. The money stays here, and stays in the hands of We The People.

    Because we can’t afford them, that’s why. If we are truly worried about deficits – instead of just scoring points against the Bush Administration – then we must be concerned about ALL deficit spending. Right now – and over the long haul – entitlement programs are the main driver of federal spending.

    Someone has to pay for these programs. We can raise taxes, but sooner or later, taxes will become so onerous that they discourage investment and encourage fraud or a black-market economy.

    We can indulge our “tax-the-rich” fantasies, but the truth is that if we taxed the richest 1 percent of the population at 99 percent of their income, the resulting revenue would not be nearly sufficient to pay for future government spending (it wouldn’t be enough to pay for those programs for even a year). That means the middle class will have to eventually be taxed at a heavier rate.

    Pch101: Welfare is good if it prevents the alternatives, like food riots and crime. If you want a good case study for what happens when a population is neglected, go search for Marie Antoinette’s head and you’ll find it there.

    The French Revolution is a good case study of what happens when the government overextends itself in an overseas adventure, and then mismanages the economy at home.

    Ironically enough, in this case, it was because the French government extended financial and military aid to the Americans in the Revoluntionary War, to spite the British. The French government then excessively taxed the populace and began meddling in the economy.

    One reason there was no bread (hence, Marie Antoinette’s infamous quote) was because of government meddling in the free market (including price controls).

    There are a few lessons for America in there, but not one that says we must spend more on welfare or entitlement programs to avoid riots.

    Stein X Leikanger: If you’ve already made up your mind, geeber, there’s no point trying to change it. :-)

    Housing values are dropping, but some categories are dropping faster.

    Stein, the NPR article you linked to claims that housing prices in inner city areas are actually RISING. Now you are saying that they are falling at a slower rate than in other areas. Those are two entirely different scenarios, especially if someone is looking to buy a property.

    With just a cursory search I was able to find a current article that directly contradicts the assertions in the NPR article, and I could find even more on thehousingbubbleblog.com, which has been tracking the imploding housing market for the past year.

    I wouldn’t pay asking price for any real estate in this market, whether it’s located in exurbia, an older suburb or an inner city neighborhood.

    Anecdotal evidence – my wife and I are looking for a house right now, and we have our eye on several properties. Bottom line is that the ones located in the older, closed-in suburban neighborhoods are not moving any faster than the ones farther out of town. Right now, virtually everything appears to be DOA around here.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • J & J Sutherland, Canada
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India