U.S. Healthcare Spending Has Risen

Dr. Ed Yardeni has put together a post showing the consumer has saved dollars YTD on gasoline prices, the savings is being eaten up by higher medical expenses.
healthcare spending

Last week, I observed that while consumers are spending less of their budgets on gasoline, they are spending more on health care. The latest data through January show that the percentage of current-dollar consumption for gasoline plunged from last year’s high of 3.2% to 2.1% in January. Consumers saved $133 billion (saar) on gasoline over this period.

On the other hand, the percentage of their outlays for health care goods and services rose from last year’s low of 20.0% during March to 20.6% during January. I received lots of inquiries about this topic. Most readers want to know if this is attributable to Obamacare, which seems to have raised health insurance premiums, deductibles, and copays. I think so, but I don’t have the data to corroborate this conjecture.

Health care consumption includes spending paid for by both insurance and government programs, as well as out-of-pocket costs. Presumably and anecdotally, the latter have risen sharply. However, that wouldn’t necessarily bloat overall spending, though more out-of-pocket outlays would depress spending on other goods and services.

Oil Rig Production Continues Plunge

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Oil rig production continues its plunge and gas prices are starting to show that. Here is the latest data on oil rigs:

The number of active U.S. land rigs plunged by 98 this week in one of the biggest declines in the past three decades as fallen oil prices continued to pummel the industry’s drilling ambitions.

Baker Hughes’ 71-year-old U.S. rig count, one of the industry’s go-to indicators of future oil production and demand for rigs, was down by 406 drilling units compared to Feb. 13, 2014. The last time the rig count fell by 98 was in January, 2009 – the two declines are tied for the biggest drops since 1987.

H/T Fuel Fix

Oil Rig Production Drastically Drops

Gasoline prices are slowly rising which is correlating with oil rig production. Baker Hughes Inc. released data showing ninety four more oil rigs taken out of production.

oil rig production

RenewEconomy.com had this write up about the production of oil being shut off:

In just three months, the rig count has fallen by 24 per cent, or 389 from the all-time high of 1,609 recorded for the week of 10 October last year. As Mark Lewis, from Paris-based analysts Kepler Chevreux notes: “In all of the historical Baker Hughes data stretching back to July, 1987, there is no precedent for a drop of this speed or severity.”

Why Gas Prices Will Go Back Up Part II

In December I posted a blog about why gas prices will go back up and it received numerous hits. The content of that post is now playing out.  Mark J. Perry just released some data of oil rigs being shutdown due to the drop in price of crude oil.  Here is what he found:

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US Oil Rigs Fell Last Week to 1,317, Down 292 and 18% from October Peak of 1,609

This is a quick reversal so I wouldn’t be surprised if 500 shutdowns happen before March. With production falling and the strength of the dollar in question, crude oil will eventually start rising.

Percent of Fuel Cost in Your Grocery Store Bill

With fuel prices dropping over the last several months, many shoppers are asking why food prices have not shown corresponding drops in prices. The asnwer may surprise you in how much fuel costs affect grocery store bills.

Annemarie Kuhns with the Agriculture Department’s Economic Research Service is reporting that only 4.7 cents of every dollar spent at the supermarket goes toward food transportation costs

So less than 5% of your bill is attributed to fuel costs.

Gasoline Taxes Paid by Consumers

Consumers of gasoline pay state/federal taxes when they purchase gas. The tax is per gallon. The federal tax on gasoline is 18.4 cents/gallon. State taxes vary greatly. The map below shows both state/federal. Just deduct the federal to see what you pay in each state.

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Map courtesy of the American Petroleum Institute. Click here for their interactive map.

Indianapolis Star: Gas stations bring crime and unhealthy food

Sunday addition of Indy Star brought about some reveleations that even stunned me. Not so much of its trueness but of its complete idiocy of accusations. According to Indy Star writer Erika Smith, Gas stations bring crime. The plot of the article is some neighbors in the area on the West side are not liking the growing number of gas stations popping up.

For the past five years, these businesses have been moving into this urban core neighborhood and others at an alarming rate: 10 stations within a two-mile radius along the high-traffic corridors of West Washington, West Michigan and West 10th streets

So what are the main reasons to not like gas stations now?

The problem isn’t so much with the gas that the stations sell, but with the crime they attract and the convenience stores that come with them. Full of cheap, unhealthy food and paraphernalia that people use for illegal drugs, the businesses are easy money makers in neighborhoods bereft of grocery stores and wracked by poverty.

She goes on to state as an example Rural/New York Street where there is a gas station. It had 900 calls over 10 years Smith states. I looked at that area for the month of May/June. Closest crime listed there through Spot Crime is three blocks east and IMPD labeled that as “Other”. Smith also goes on to state that those gas stations builders are following those pesky zoning laws:

The hangup is a mix of outdated zoning laws, neighborhoods that for years have been empty of vocal stakeholders, and the profitable business model of opening gas stations and convenience stores in poor urban areas.

Read the rest of the article if you want to see Academy award winning emotions for “Social Justice”. My job on this blog is to use Austrian thinking to rip apart crap published like this. Overall Smith’s biggest problem is the profit side of these gas stations. I can’t explain why she doesn’t like them, she just doesn’t. She will go to great lengths to demonize them to her audience. What Erika Smith doesn’t address from an economic standpoint is the amount of investment from investors or banks that go into building, remodeling or stocking a gas station. It takes great preparation of studying the area to see what needs are to be met. If it’s a poor area, countless economic writers have written about grocery stores leaving those areas because it’s 1) Too Risky & 2) Not profitable. What Erika Smith needs to do is kiss the feet of gas stations that open up in poor areas. Because without them, those in the X number of square block area wouldn’t have access to supplies the gas station has in stock.

I really don’t debate the “unhealthy food” scapegoat anymore. In this day and age, if you haven’t picked up the difference of bad or good food, then there isn’t much hope for you. Smith has stated in other articles throughout the years that some sort of organization through government needs to teach people on how to cook. She basically went full communist mode at that point.