The last I saw domestic gasoline consumption has been looking modestly higher, even as prices are up.
Here’s how I see how that works out:
1. The US bill for imported crude goes up and consumption doesn’t fall.
2. US consumers have less to spend on other things.
A) Iran and Saudia Arabia use their incremental winnings to buy US jets and nuclear reactors from US companies.
a) US jobs and paychecks in jets and nukes business increase by the same amount as the oil price hike, so
b) US domestic consumption remains constant.
Summary of results:
More US people working more hours and consuming the same in total.
As a whole that’s a negative outcome.
More exports for the same amount of imports.
Also a negative- declining real terms of trade.
It’s a case of ‘looks good’ (a few more jobs, exports up)
but feels bad (working harder for the same consumption).
B) Iran and Saudi Arabia don’t spend the dollars
a) Domestic (non oil) consumption falls, so
b) Output and employment falls
This is a case of looks bad and feels even worse.
What actually happens seems to be somewhere in between?
Crude prices up, exports up, and jobs flat.