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Oil Prices and Hidden Bad News
 In 2008 Americans will pay $300 Billion more for oil than they did in 2007 and $480 Billion more than they paid in 2005. How does this reflect on the economic recession? Not as much as you'd think.
Under the category of "statistics can be made to say anything" oil prices are reflected in the economic downturn. Because GDP (Gross Domestic Product) includes imports and exports in its calculation the extra money Americans are paying for oil is being subtracted from the overall total. Import dollars are a minus in the GDP calculation. Therefore; a good portion of the economic recession can be explained by the extra $263 billion leaving the country to pay the oil bill. The economy in general is healthy. It will just take a little time to adjust to this added expense.
Unfortunately, the oil market does not work like this and oil's influence on the economy is much more insidious. In 2007 the U.S. paid approximately $327 billion to import oil. In 2008 the number is expected to reach $440 billion, a whopping increase of $113 billion. Yet Americans will pay more than $300 billion for oil. What happened to the extra $187 billion?
This $187 billion is going to domestic oil producers and speculators (much more the latter than the former). This actually contributes to the Gross Domestic Product! So what is really happening? Quite simply, this money is being taken from the general public and handed to the oil companies and speculators. Every American household on average is handing $1781 to oil companies and speculators. This is redistribution of income in the reverse. Couple this with the additional $113 billion they are sending oversees and the American families are transferring more than $2800 of their household income to an oil company, speculator or foreign nation thanks to the rise in oil prices.
Except for the $113 billion, these numbers are not reflected in the GDP and hence are not part of the overall recession picture. The money isn't lost. It is simply transferred from the public to the speculators. Based on the latest economic numbers the overall American economy is not in a recession. Based on what we see here, the American public definitely is.
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