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Rising gas and diesel prices have been blamed for slowing the momentum of the U.S. economy in recent months.

This is the latest in a series of research articles in the Financial Times examining the “global fuel bubble,” which is based on the belief that the U.S. economy is suffering because of a large oversupply of oil and related fuels around the world. While the argument against this theory makes many sense, the underlying evidence is weak and could easily be overturned by a drop in gas prices or the economy returning to a more normal growth pattern caused by lower oil prices rather than a worldwide commodity oversupply. As the paper’s authors note, “it’s difficult to imagine the bubble popping.”

The FT has a couple of examples of how the global fuel trade works, but one of the problems is that it’s difficult to separate the flow of commodities from the flow of consumers, which can cause “friction.” So what about the effects of higher crude oil prices on gasoline consumption and the economy at large? Turns out, it’s probably less dramatic than the FT assumes.

That argument can be made using real-world data on retail gasoline prices and gas prices in the United States. In the chart below, an average person is shown in the red circle (which shows the total U.S. economy) and gasoline prices in the blue circle, which are the average price of a gallon of regular gasoline. The vertical axis of the chart shows the change in retail gasoline price between 2009 and 2013. Click on the chart to enlarge (not long enough to show on the image).
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(Chart: Federal Reserve Board/IEA)

The most dramatic price drop over the past few months came in January, when oil prices fell to a three-year low of $35 per barrel – about 10 percent below its January 2009 low. But the price

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