According to the Bureau of Transportation Statistics, there were 135,399,945 passenger cars in the United States as of 2006. The owners of all those vehicles have had less money to spend as the price of gas has soared. What impact does this have on the economy – and on your investments? Let’s do the math and find out.
Let’s say the average driver drives 1,000 miles per month and gets 20 miles per gallon. That would mean each one is using 50 gallons of gas per month. According to the Department of Energy, the national gas price has gone up $0.62 on average in the past year. So the average driver has $31 (50 gallons times the $0.62 price increase) less per month to spend on items other than gas. This may not seem like a huge difference, but let’s take the next step.
Multiply the number of cars (135,399,945) by $31 per month. That’s an additional $4,197,398,295 going into our gas tanks each month instead of getting used for other purchases.
The U.S. is bordering on a recession, and gas is taking an additional $4.2 billion out of the economy each month. How long do you think gas prices can stay this high without the demand falling significantly?
Prepare for falling oil and gas prices by scaling in to the shares of the ProShares UltraShort Oil and Gas Fund (DUG). This ETF goes up in value as the price of oil falls. It might not happen next week, but, from a purely economical standpoint, the price of gas can’t stay this high.
[Ed. Note: Invest in ETFs that rise as the price of oil falls. Simple advice that's easy to follow - this is the trademark of Rick's K.I.S.S. investment service. In it, this professional trader and investment analyst gives easy-to-follow, step-by-step advice that you can use to create consistent, automated income. Get the details here.]
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