Are We Repeating the Gas Prices of 2008 All Over Again?

Remember back in 2008 when oil went to $140/barrel and $4 a gallon gas? It looks like we might be reliving 2008 fourteen years later.

I for one hope that 2022 gas and oil prices do the same thing they did in 2008. Read on for some oil and gas revivalist history and how we survived.

As we moved into January of 2008 the stock market, housing, federal reserve, and the entire financial system was toppling — at the same time gas prices started to rise.

January 2008

The New Year came with a bang. We woke up to $100/barrel oil and regular at the pump with $3.05/gal. Happy New Year.

In other good news General Motors revealed they lost a whopping $38 billion in the previous year.

The economy lost 17,000 jobs the most since 2004

Let the good times roll.

March 2008

The Federal Reserve tried to bail out and save the investment bank Bear-Stearns.

Surprisingly the stock market stayed pretty level at this point, but the worst was yet to come.

April and May 2008

In April gas prices increased $.35 to a then record $3.50. That was a short-lived shock for May 15th gas prices finally reached $4.00 ($5.24 in 2022 dollars). Oil hits $130 a barrel.

Online sites like Gas Buddy were overwhelmed with people trying to find the lowest prices for gas.

June and July 2008

In June gas prices break the $4.00 a gallon barrier. Investment speculators are pushing oil prices up and down.

More people are looking at hybrid vehicles. Some are running out of gas trying to get every drop of gas before the next rise in prices.

Public hysteria begins.

Gas stations are starting to run out of gas ala the gas lines and oil embargo of the1970s.

Crude oil reaches $147 dollars a barrel on July 7th.

Average gas prices are at $4.11 — a record high. Vacations and road trips are put on hold.

Derivatives and subprime housing take its toll on Fannie Mae and Freddie Mack. The US Treasury is forced to guarantee $25 billions of their loans.

FHA (Federal Housing Authority) steps up to fund $300 billion in new loans.

August 2008

As gas prices stabilize oil begins to fall to $120 per barrel. Is this the beginning of the end? Not quite.

September 2008

The Stock Market is facing a serious meltdown. Oil goes below $100 a barrel for the first time in half a year.

In mid-September Lehman Brothers declares bankruptcy sending the Dow to a negative of over 200 points.

That was just the tipping point and the first shoe to drop.

The second shoe was a big one. The Fed was going to bail out American International Group with an $85 billion loan and a 79.9 percent equity share.

AIG ran out of the cash needed to pay off credit default swaps for the failing mortgage-backed securities.

People who could never qualify for loans in the first place were walking away from homes they had no resources to pay for.

As a result of Lehmann and AIG money market funds lost $196 billion. Money markets are where business deposit it’s overnight cash.

Panicked business turned to bonds because rates were high, and banks were fearful of lending to each other.

Two days after Lehman and AIG the Dow dropped 449.36 points.

In late September the Federal Reserve presented a bank bailout bill to Congress. The Senate rejected the bill, and the Dow went down 777.68 points.

Oil dropped to $95 a barrel and gold rose to $900 an ounce.

Global markets began to panic. Some stopped trading all together.

The world was faced with frozen credit markets and the world governments were forced to put the liquidity forward to stop things from getting worse.

In short it was a f**king mess.

October 2008

October should have been called Red October with the financial markets taking a deep, deep, dive.

Despite all this financial turmoil gas finally reaches $1.99 per gallon in some areas. Oil prices fall to below $70 a barrel. Winnebago’s and SUVs are seen on the roads again.

Congress finally passed the bailout bill which turned out to be too little too late.

One hundred fifty-nine thousand jobs were lost in September. (159,000)

The Dow closed below 10,000 for the first time since 2004 by dropping 800 points.

The Fed lent banks $540 billion to keep them solvent with all the redemptions.

Five hundred billion dollars had been withdrawn from Prime Money Markets.

The Dow continued its free fall of 15 percent through all of October.

The nation was officially in a recession.

November 2008

The Dow hit a new low of 7,552.29 (down from 13,000). Retirement plans, and 401(k)s gone.

At the same time gas prices go down to $1.72 per gallon. Some stations ran promotions with prices as low as $.99.

Poor yes, but at least gas was finally affordable again.

But the worst continued. In October 240,000 jobs were lost. The bailout of the AIG bailout had grown from $85 billion to $150 billion.

Part of the $700 billion bailout would be used by the Bush Admiration to buy preferred bank stocks.

Next came the bailout of the Detroit big three automakers. They received $17.4 billion in rescue loans. Ford went on their own without federal help.

I wonder why they didn’t save the Plymouth, DeSoto or the Studebaker?

December 2008

OPEC cuts 2.2 billion barrels per day from its production in an effort to create more demand to raise prices. It didn't work crude oil reached a low of $40 a barrel.

Toyota reports first loss in 70 years. Prius sales were down also. Interest in hybrid cars begins to wane.

The day after Christmas gas hits $1.64 per gallon. Crude oil is just over $40 a barrel.

On the last day of 2008 oil goes down to $37 a barrel and gas goes to a yearly low average of $1.61

The Fed dropped the interest rate to 0 percent, the lowest in history. The Dow finished this rock n’ roll year at 8,776.39 down 34 percent for the year.

Some Final Thoughts

Those of us who lived through the Carter 1970s, the 1987 crash, the 9/11 crash and aftermath and the 2008-09 crash are probably not taking this as hard as many of you experiencing it for the first time.

And that’s understandable.

In case you’re wondering about what happened in 2009, he’s a couple of extras. President Obama came into a real financial and deficit mess.

The Stock Market hit a low of 6.594.44 in March of 2009. But it was back at 12,000 by December of 2009.

The Stock Market didn’t fully recover from 2008 until March of 2013.

So, by advanced calculus — five years.

As I said earlier if you’ve never been through something like that before imagine living in 1980 with a 10 percent unemployment, 15 percent home loans, 10 percent inflation and a 20 percent Prime Rate (the rate banks charge their best customers).

Having been through all that — waking up to four- or five-dollar gas is not the first thing I have on my mind.

I’m just glad my dollar is worth enough to buy gas. Humm maybe I should be worrying about that.

Damn, I knew I shouldn’t have written this.

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