Ares
22nd April 2011, 11:27 AM
Now this is kind of a hard post to write, due to the wide range of effects high gas prices will have on the economy, and in our daily lives. But here we go.
For kicks, I thought we would start this off by a list of items we depend on oil for. Since there are so many, I found a website that will better serve this purpose. Scroll down through the site. Scary isn't it?
http://www.saskschools.ca/~carnduffelem/oilpages/uses.htm
Sustained higher oil and gasoline prices will have a detrimental impact on our so called economic "recovery". I for one believe we have not recovered at all. I believe the government has done an absolutely horrible job, of initiating shitty programs that have done anything but make things worse, and extend the mess we are in. WE ARE IN, AND HAVE BEEN IN A DEPRESSION. One that is about to get a lot uglier. It will now start affecting you and I, on a daily basis. Another thing they have done a terrific job at is wean us off of cheap oil.(A little sarcasm there) We use oil(petroleum) for almost EVERYTHING. And our dependency has actually increased, especially on foreign oil. Makes you feel all warm and fuzzy when you see that everything is falling apart in the middle-east. We get most of our oil from Canada and Mexico, but they set the prices. Not good for us.
When you look at how deep the effects of expensive petrol run through our daily lives, it can be downright shocking. Did you know that your average grocery store item travels 1500 miles on average to get to your local grocer? Makes you feel safe doesn't it? Let's see how deep this rabbit hole goes, shall we?
Oil is in the fuel that's in the boat to ship it to our country. Then more fuel is burned in the big cranes unloading it from the ship onto the truck. Then more oil is used in the rubber for the 18 tires of the truck, and in the diesel fuel to drive it to the warehouse. The warehouse uses electricity that comes from the local power plant, who uses fuel to make the electricity. Then the goods are loaded up again on another diesel sucking 18 wheeled-rig to deliver it to your local Walmart. I may have missed a few things here, but you get the point.
And that my friends is the average travel life of the banana on your kitchen counter top. Now a lot of things are shipped by train, which are incredibly fuel efficient. But they are not reliable for refrigerated goods, and are not as time efficient. Remember in America we have to have everything NOW. Businesses have adjusted to accommodate that need.
Ultimately what this boils down to is: When it costs more to ship a product, a portion, if not all of that cost, is passed onto the consumer. That would be you and I for those paying attention. So basically every part of the economy will start to break down, as we get closer, arrive, and move past $5 a gallon gasoline. From what I can see, we have a good chance of being closer to $8 by the end of year.
I for one am not looking forward to a $60 gas bill at the pump, every time I fill up the stang. But that again is being short sighted. Everything will cost more. Ever since gas hit $3 a gallon, the price of food has skyrocketed. There is a large element of inflation fueling all of this, which you can read about in other posts. I'm just making the point that rising gas hasn't caused all of this, just makes it worse. A lot of the time businesses will suck up the rising costs, until they can no longer afford to. Basically until profitability starts to dwindle and they have no other choice. It's either close up shop, or charge the customer more. Remember that not everyone wants to raise prices, times are hard. And sometimes raising prices will cause the volume of customers to deteriorate, and they will have to close down anyway. It's called a margin squeeze, and A LOT of businesses are already feeling the pain. But they do have an interest in keeping prices down as long as possible. Restaurants will be decimated, not good for me :(
Did I mention that Iran and Saudi Arabia might be going to war? This kind of instability could cause to go to $10 a gallon overnight. So it will do you some good to act on this sooner than later.
Alright so what can you do about all of this? Well for starters, since now you know that everything will be rising in price, you can buy more now of what you will need tomorrow. Basically, stock up. Buy two tubes of toothpaste instead of one. Pick up 24 rolls of toilet paper instead of 12. Particularly anything that comes to the top of your mind, that you can't do without. But do not neglect your pantry! Sock up on long term non-perishable food items. Most canned name brand items last 3 or 4 years, so you really can't buy too many.
We have to accept the fact, that soon life will not be as great as it once was. We won't have everything on a silver platter, and the things we take most for granted will be either gone, or much harder to come by. Be thankful for everything you have, it's a good virtue, and will help you through the hard times. There are always people worse off. Gas prices are $9.50 a gallon in Norway. Yikes!
And of course, like I have always advocated and encouraged, you need to protect your purchasing power. Gold and Silver will become a currency(they already act like it) just like the dollar in the near future. You are better off having it now while it is cheap, and it will rise with the price of everything else. So you will always be able to buy what you need in the future without much worry. Something to think about.
http://crinerinvestments.blogspot.com/2011/04/implications-of-5-gallon-gasoline-and.html
For kicks, I thought we would start this off by a list of items we depend on oil for. Since there are so many, I found a website that will better serve this purpose. Scroll down through the site. Scary isn't it?
http://www.saskschools.ca/~carnduffelem/oilpages/uses.htm
Sustained higher oil and gasoline prices will have a detrimental impact on our so called economic "recovery". I for one believe we have not recovered at all. I believe the government has done an absolutely horrible job, of initiating shitty programs that have done anything but make things worse, and extend the mess we are in. WE ARE IN, AND HAVE BEEN IN A DEPRESSION. One that is about to get a lot uglier. It will now start affecting you and I, on a daily basis. Another thing they have done a terrific job at is wean us off of cheap oil.(A little sarcasm there) We use oil(petroleum) for almost EVERYTHING. And our dependency has actually increased, especially on foreign oil. Makes you feel all warm and fuzzy when you see that everything is falling apart in the middle-east. We get most of our oil from Canada and Mexico, but they set the prices. Not good for us.
When you look at how deep the effects of expensive petrol run through our daily lives, it can be downright shocking. Did you know that your average grocery store item travels 1500 miles on average to get to your local grocer? Makes you feel safe doesn't it? Let's see how deep this rabbit hole goes, shall we?
Oil is in the fuel that's in the boat to ship it to our country. Then more fuel is burned in the big cranes unloading it from the ship onto the truck. Then more oil is used in the rubber for the 18 tires of the truck, and in the diesel fuel to drive it to the warehouse. The warehouse uses electricity that comes from the local power plant, who uses fuel to make the electricity. Then the goods are loaded up again on another diesel sucking 18 wheeled-rig to deliver it to your local Walmart. I may have missed a few things here, but you get the point.
And that my friends is the average travel life of the banana on your kitchen counter top. Now a lot of things are shipped by train, which are incredibly fuel efficient. But they are not reliable for refrigerated goods, and are not as time efficient. Remember in America we have to have everything NOW. Businesses have adjusted to accommodate that need.
Ultimately what this boils down to is: When it costs more to ship a product, a portion, if not all of that cost, is passed onto the consumer. That would be you and I for those paying attention. So basically every part of the economy will start to break down, as we get closer, arrive, and move past $5 a gallon gasoline. From what I can see, we have a good chance of being closer to $8 by the end of year.
I for one am not looking forward to a $60 gas bill at the pump, every time I fill up the stang. But that again is being short sighted. Everything will cost more. Ever since gas hit $3 a gallon, the price of food has skyrocketed. There is a large element of inflation fueling all of this, which you can read about in other posts. I'm just making the point that rising gas hasn't caused all of this, just makes it worse. A lot of the time businesses will suck up the rising costs, until they can no longer afford to. Basically until profitability starts to dwindle and they have no other choice. It's either close up shop, or charge the customer more. Remember that not everyone wants to raise prices, times are hard. And sometimes raising prices will cause the volume of customers to deteriorate, and they will have to close down anyway. It's called a margin squeeze, and A LOT of businesses are already feeling the pain. But they do have an interest in keeping prices down as long as possible. Restaurants will be decimated, not good for me :(
Did I mention that Iran and Saudi Arabia might be going to war? This kind of instability could cause to go to $10 a gallon overnight. So it will do you some good to act on this sooner than later.
Alright so what can you do about all of this? Well for starters, since now you know that everything will be rising in price, you can buy more now of what you will need tomorrow. Basically, stock up. Buy two tubes of toothpaste instead of one. Pick up 24 rolls of toilet paper instead of 12. Particularly anything that comes to the top of your mind, that you can't do without. But do not neglect your pantry! Sock up on long term non-perishable food items. Most canned name brand items last 3 or 4 years, so you really can't buy too many.
We have to accept the fact, that soon life will not be as great as it once was. We won't have everything on a silver platter, and the things we take most for granted will be either gone, or much harder to come by. Be thankful for everything you have, it's a good virtue, and will help you through the hard times. There are always people worse off. Gas prices are $9.50 a gallon in Norway. Yikes!
And of course, like I have always advocated and encouraged, you need to protect your purchasing power. Gold and Silver will become a currency(they already act like it) just like the dollar in the near future. You are better off having it now while it is cheap, and it will rise with the price of everything else. So you will always be able to buy what you need in the future without much worry. Something to think about.
http://crinerinvestments.blogspot.com/2011/04/implications-of-5-gallon-gasoline-and.html