As of Jan. 5, I was paying $1.89 a gallon for gasoline compared to about $3.30 a gallon six months ago. This price reduction represents what might be the biggest and perhaps only “pay raise” (increase in disposable income) some of us have seen since the recent recession.
However, this is but symbolic of an energy game changer for all of us.
A large part of the long-term sustained economic growth pattern in the good old days of the ‘90s and early 2000s was technology driven. Some of the frustration that has dogged the mostly weak U.S. economic recovery until recently have been the absence of major technological changes that would boost productivity.
The good news is that the weak U.S. economic recovery appears to be ending, not because of traditional technological breakthroughs (or for that matter government policies and programs) but because of an unanticipated real decline in the price of oil. This is having a domino effect on other energy prices related to oil.
For example, we have seen energy prices for natural gas liquids, key inputs to basic manufacturing such as plastics, heating homes, etc., decline 25% to 40% between Sept. 1 and Dec. 1. Consequently, basic energy inputs are considerably cheaper for manufacturers and consumers, analogous to the decline in retail gasoline prices.
For the U.S., the new regime of lower energy prices will cut across all sectors of society from the costs of manufacturing to consumer disposable income and spending. The prospects for sustained economic growth that were not envisioned more than six months ago are mind-boggling. This bodes well for the inland waterways.
Back when the U.S. economic doldrums persisted long after the recovery had been declared, the prescription for real economic growth from some energy dependent sectors was expressed as “drill baby drill.” That has happened in the private sector and the results speak for themselves.
The barge industry that promoted the nine-cent-a-gallon increase in the inland waterways fuel user fee that was recently signed into law did not give anything away. With fuel prices declining, there will be plenty of new wealth to be created.
