cost of living (1)

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1291039?profile=RESIZE_320x320After hearing one analyst commenting that lower prices at the pump would translate into increased oil demand, I had to open up the commentary notepad.  (click on charts to enlarge)

The first thing that immediately came to mind was the rising costs elsewhere in Americans pocketbooks that would take up the slack of lower gasoline prices, such as rent.  Social Security recipients for example will see an increase of 1.9% in 2015 however this is no where on pace with the increases in average rents which continue to climb.  In fact, how about a rent increase of 6.9% in November according to Trulia?  Ouch!

Indeed incomes, when adjusted for inflation, have definitely not kept pace since 2000. (chart right).  Add to this the fact that the majority of new jobs being created are at the low end of the pay scale and you have a situation where any savings at the pump are not going to translate into further driving and gasoline demand but to holiday spending, consumer staples and yes, pay the rent.

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