Monday, June 1, 2009

fuel prices and the economy

This was written by a friend of mine. It's well worth reading.

The country doesn’t run on Wall Street or government…. It runs on all of the micro economies across the country. I’m not talking about the big metropolises; I am talking about all of the areas across the country that are similar to the Mississippi pine belt. These micro economies are very fragile and can be easily upset by as little as a 25 cent increase in the price of fuels.

A personal observation if you will…. Mid June 2008 when the price of oil and fuels peaked, there were almost no vehicles on the road, and nobody in the stores. They had no money to spend….it was all going to fuel their vehicles so they could get back and forth to work. Within a week or so after the price of fuels dropped in the fall, there was traffic on the roads again, and people were in the stores spending money again, because every dime didn’t have to go in the gas tank.

Fast forward to February 2009…. People had gotten some “breathing room” in their finances, and were getting caught up so they had more money to spend….This is what was stimulating the local economy. People were on the roads and in the stores because they had disposable income again. Now in the last month, the price of gasoline has come real close to doubling again because the speculators have seen the national economy start to rebound, and the price of oil and fuels have jumped by leaps and bounds again. Plain old working folks can’t afford to take vacations, and are having a hard time making ends meet again…. All because of the increased price of fuels. Now in May 2009, fuel prices are on the rise again, traffic on the roads is disappearing again, money flow has all but come to a screeching halt again, and retail businesses are already feeling it in reduced revenue. This is just the beginning… the trickledown effect is that there is a reduced demand for goods and services, retailers and manufacturers will have to lay off even more people, or close. The costs for transporting products and materials will rise even more.

If the economy is to truly rebound and recover, the price gouging by big oil and speculators MUST stop, the refineries must be brought back up to normal production levels again as well as opening back up all the platforms and production facilities. As I recall, the refineries have cut their production capacity down by 80% or more, as well as shutting down enough platforms and facilities to have to lay off thousands of workers…. All for the purpose of artificially increasing the price of oil and fuels.

Here’s a news flash… there is no more “travel season” because people can’t afford it. People don’t have the disposable income to spend. If the oil companies want to make more money, they can increase production, to lower the price of gasoline and fuels to where they *should* be, and keep it that way. For that matter, instead of raising the price of fuels in summer, the prices need to drop so people can afford to take their vacations, and can afford to travel, and be able to spend more money.

Want to raise gas and fuel prices?? Just remember that to raise gasoline and fuel prices comes at a great cost , and not just to the oil companies profits…. It will do more to destroy the entire country and the national economy, and is counterproductive to making money flow and “stimulating” the economy than anything else.

Steve Nunes@ Noon-Air Heating & A/C


Diane said...

OPEC wants the prices at a rate that is around $120 a barrel.. that will leave gas prices around $3 a gallon. Obama is OK with high gas prices, he was just dismayed with the rate at which the gas prices went up previously. Look at the CAFE standards he is imposing. The cars that will be held to these standards will be so small as to become rolling deathtraps.

Bob G. said...

You nailed that one...smaller cars = more fatalities = fewer people = less government assistance and healthcare = less taxes = brokeback government!

"Play it again, Sam".

Sounds like a plan...NOT!

As to the a word:


USA_Admiral said...

Outstanding post.

Gas went up down here about 35 cents in 3 weeks.

cbullitt said...

Oil prices dropped last year when Bush voided the presidential ban on offshore drilling--the mere threat of additiopnal supplies drove the price down. That Moritorium is back with Obama--who wants $7/gallon gas. HE has already said he will make it impossible to build new refineries, and to drill for new supplies through regluation, taxation and litigation. So, the naive "the oil companies are gouging us" shit is just that. There will be no increased production because it won't be allowed.