Gasoline the reality for most folks

[tod evans]

Most families I know burn through less than 2 tanks a week so even if gas prices at the pump rise $1.00 per gallon that works out to less than $40.00 per week.

Granted that amount of money isn't insubstantial but given all of the other factors affecting a families living standard it seems as though if a person looked at the costs of food and housing, clothing etc. the gas/oil part of the economy gets much more emphasis in the syndicated media than it deserves.

Most of us can regulate to some extent how much gas/oil we burn through but the other necessities of life are pretty much a given.

Am I the odd duck here who feels as though there's been some sort of diversion tactic going on?

$42+k per-person in government induced debt = 20 YEARS of $1.00 a gallon increase in gas! And that is with today's FRN value.

So, is the price of gas really that important to most folks here? Somehow I don't think so

 

[Captain Shays]

Sorry. You're wrong on this. The gas prices this last year at even $2.50-$3.50 have been killing my business and setting me back in a horrible way. At $4.00-$5.00 it might actually do me in. I don't know how we're going to survive it.

 

[ghengis86]

I think you overlook the fact that everything you need/eat/use/wear/etc. travels on a truck running on diesel. Everything requires petroleum in today's world. So where you might be correct on the impact of gasoline costs being insignificant to a normal family (and I think you're a bit low on your assumption), the impact of price inflation in oil due to monetary inflation is much, much greater, the consequences of which are definitely being felt in household (and business) budgets across the nation.

 

[Danan]

http://www.youtube.com/watch?v=aaMokpxq-u0

Bombing the middle east > oil prices, obviously.

 

[ghengis86]

Here's the real reality:
every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year
http://www.bloggingstocks.com/2010/12/06/oil-s-price-approaches-the-danger-zone/

http://www.zerohedge.com/article/wt...ut-200-billion-annualized-gdp-under-two-hours

 

[Danan]

I think you overlook the fact that everything you need/eat/use/wear/etc. travels on a truck running on diesel. Everything requires petroleum in today's world. So where you might be correct on the impact of gasoline costs being insignificant to a normal family (and I think you're a bit low on your assumption), the impact of price inflation in oil due to monetary inflation is much, much greater, the consequences of which are definitely being felt in household (and business) budgets across the nation.

And not only has every good to be transported, but with a rising cost of living (due to higher transportation costs) the average wage has to go up, too. Which leads to even further "price inflation" and worsens the export ability.

 

[ghengis86]

Oh and $40/week is $2,080/year! That's not a small number in my book!

 

[Carole]

Most families I know burn through less than 2 tanks a week so even if gas prices at the pump rise $1.00 per gallon that works out to less than $40.00 per week.

Granted that amount of money isn't insubstantial but given all of the other factors affecting a families living standard it seems as though if a person looked at the costs of food and housing, clothing etc. the gas/oil part of the economy gets much more emphasis in the syndicated media than it deserves.

Most of us can regulate to some extent how much gas/oil we burn through but the other necessities of life are pretty much a given.

Am I the odd duck here who feels as though there's been some sort of diversion tactic going on?

$42+k per-person in government induced debt = 20 YEARS of $1.00 a gallon increase in gas! And that is with today's FRN value.

So, is the price of gas really that important to most folks here? Somehow I don't think so

You are so wrong. Forty dollars is a lot of money to me. Furthermore, the residual effect is that the price of EVERYTHING goes up when gasoline goes up. Transportation costs of delivering products. This is exactly what Dr. Paul talks about, the hidden inflation, the not-so-hidden costs to the people of everything. This is the theft of the people.

 

[ghengis86]

And not only has every good to be transported, but with a rising cost of living (due to higher transportation costs) the average wage has to go up, too. Which leads to even further "price inflation" and worsens the export ability.

Unfortunately, wages are the last thing to rise in an inflationary environment, which is why inflation devastates the working class the most.

But you're correct in that increases in forced minimum wages increases production costs and overall product cost, which can make exporting unattractive (among other factors, such as currency debasement and managed trade agreements).

 

[thoughtomator]

$40/week is > $2000/year.

Most Americans don't have the means to pay for an unexpected $1000 expense without borrowing. This will throw another legion of Americans down another rung of the standard of living.

Gas prices come out in a lot more than gas... it comes out in food pretty quick too.

 

[mikebz5]

I think you overlook the fact that everything you need/eat/use/wear/etc. travels on a truck running on diesel. Everything requires petroleum in today's world. So where you might be correct on the impact of gasoline costs being insignificant to a normal family (and I think you're a bit low on your assumption), the impact of price inflation in oil due to monetary inflation is much, much greater, the consequences of which are definitely being felt in household (and business) budgets across the nation.

THIS^^

My business is used to spending $40k in fuel. if we're looking at $50-60k that's going to kill us.

 

[Kingfisher]

Another view:
Using constitutional money (gold and silver) gasoline is much cheaper now than in the 1950's when you could buy a gallon for a silver quarter. A silver quarter is now worth over $6.00 in Federal Reserve notes. So gasoline would need to be over $6.00 to be up to 1950's prices.

 

[Danan]

Unfortunately, wages are the last thing to rise in an inflationary environment, which is why inflation devastates the working class the most.

But you're correct in that increases in forced minimum wages increases production costs and overall product cost, which can make exporting unattractive (among other factors, such as currency debasement and managed trade agreements).

I wrote "price inflation" for a reason. =)

Of course the FED is the main reason for increasing oil prices, no doubt about it.

But my point about wages is correct. If the price of oil rises (of other reasons then the FED, let's say because of uncertainties in the middle east) transportation costs go up, as well as production costs for energy, plastic, pharmaceutical articles and so on. The increase in the cost of living then causes all wages to rise (these are not based solely on productivity of the worker, but also on the overall price level, etc. This is not only the case for the minimum wage. Of course a increase in the minimum wage would cause even further unemployment.

Higher overall wages increase the overall costs of products again. So there exists a multiplier effect.

And higher unit labor costs weaken a nations ability to export. The US already has a significant trade deficit.

 

[ghengis86]

THIS^^

My business is used to spending $40k in fuel. if we're looking at $50-60k that's going to kill us.

I've talked to several owners of route/delivery based businesses (uniform rental service, natural gas delivery trucks, etc) and they're terrified at the prospects of $4-$5/gallon gas. Their profit margins will compress or evaporate so they in turn will have to increase revenue (raise prices) or cut elsewhere, as in layoffs and reduced services (after they've already cut to the bone over the last 4 years).

They have to stiff their customers with a price increase or layoff loyal workers in a small business.

Monetary inflation is a bitch; thanks Bernanke/Obama/FedGov

 

[Danan]

I'd love to have your problems. =D

Here in Europe the price for regular gas is at ~1,45 €/litre which is ~ 7,34 $/gallon if I didn't mess up the units...

 

[jbauer]

Oh and $40/week is $2,080/year! That's not a small number in my book!

Ding ding!! Whats the median household income? $40k? Thats a 5% increase (not total budget) in the cost of gasoline, let alone all the other things that have been talked about.

You used 40 gallons as what this family is going through, so 40 gallons x $4.50 / $40k = 23.4% of total income

FYI: $5.50 gas is 37% of household income for this hypothetical family.

At $5+ you can basically say game over.

 

[ghengis86]

I'd love to have your problems. =D

Here in Europe the price for regular gas is at ~1,45 €/litre which is ~ 7,34 $/gallon if I didn't mess up the units...

$7.38USD/gallon @$1.345USD/EURO exchang rate.

At that price, America would be absolutely devastated.

 

[No1butPaul]

It's not just the price of gas at the tank, or the delivery of products, but the manufacter of products. So many products are petroleum based. Here's just one small example, the resin used to make plastic products is petroleum based. So, let's say you have a restaurant chain that imports plastic cutlery from China (most do), you have costs being passed on from the product itself as well as the transport from China, then domestically to the distributors, then restaurants. It's takes a little longer to see the increase however, because most distributors have price protections for a certain period of time -- I think 90 days is pretty standard in that respect.

 

[ghengis86]

Ding ding!! Whats the median household income? $40k? Thats a 5% increase (not total budget) in the cost of gasoline, let alone all the other things that have been talked about.

You used 40 gallons as what this family is going through, so 40 gallons x $4.50 / $40k = 23.4% of total income

FYI: $5.50 gas is 37% of household income for this hypothetical family.

At $5+ you can basically say game over.

Math FTW!

 

[ghengis86]

It's not just the price of gas at the tank, or the delivery of products, but the manufacter of products. So many products are petroleum based. Here's just one small example, the resin used to make plastic products is petroleum based. So, let's say you have a restaurant chain that imports plastic cutlery from China (most do), you have costs being passed on from the product itself as well as the transport from China, then domestically to the distributors, then restaurants. It's takes a little longer to see the increase however, because most distributors have price protections for a certain period of time -- I think 90 days is pretty standard in that respect.

There's different methods; some give 30 day price locks, some have yearly pricing guarantees and some e-mail price increases with no warning.

No matter what they do, it all eventually gets passed along the supply chain and ends up at the wallet of the consumer.