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I watch a video clip about the predicted cost increase in fuel prices for this summer. The "experts" (where "ex" means former, and "spert" is a drip under pressure) are telling us that the increase in fuel prices won't have an affect on the economy. And, it seems that those who ride public transportation, or peddle their bicycles to and from work, are all for it. After all, it means less people will be driving, less pollution...
It also means higher prices for virtually everything else too. Bus fares will have to go up to cover the increased cost of fuel. Food prices (just try to get along without food) will also increase because of the "COST OF DELIVERY" It doesn't matter of the goods travel by truck, rail, or barge. All are powered by fuel, and as the cost of fuel goes up, so does the COST OF DELIVERY. That cost is passed on to the consumer. So, here's what happens.....
John and Laura (fictitious) used to spend $27 to fill their tank and drive to and from work all week. They went to the grocery store and bought a gallon of milk for $2.79. Then with a number of other things in the cart, they paid $178 for the weeks worth of groceries.
Along comes the summer of 2011, and a steady increase of 40% in fuel prices. Now, it costs $38 for them to fill their tank, and that gallon of milk went up to $4.78 a gallon. ( I use milk because being born and raised on a dairy farm, I'm most familiar with that. A truck picks up the milk from the farmer to take it to the dairy, fuel cost. That dairy sells some of it to another location across state lines, fuel cost. The cost of processing also goes up. You'll notice your electric bill goes up along with the fuel, because a lot of generating stations use fuel to generate your electricity, fuel cost. From the dairy, it's delivered to your neighborhood store, by truck, fuel cost.) But, the other food products also go up. Virtually, every item in every store is delivered by trucks using fuel. And, that cost is passed on, and it's the consumer that gets to pay more. The same amount of groceries now cost them $237. Their cost per week just went up by more than $200. That means, the new furniture will have to wait, travelling for vacation will be put off, the little extras like eating out will vanish, and they won't be spending like they did before. They might look at new cars, but they won't be buying any because the cost of existence just went up (I can't say "cost of living" because food and energy costs aren't included).
The last economic tail-spin came about because people quit spending. And, in order for the economy to start recovering, people had to start spending again. Is it a coincidence that the last tail-spin happened right along with the last spike in fuel prices? I don't think so. Our government and our leaders think we're a bottomless supply of money. Increase taxes and fuel prices, and everything else goes up too. People simply don't have that kind of money.
On a side note. I've sold my car and will not be replacing it. Increased cost of registration, increased insurance premiums, and now the increase of gasoline means I can't afford it anymore. No, I won't be riding public transportation either. The tires for my bicycle cost me $10 each today, and will probably only cost me $12 each by mid summer. That I can afford.
“The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation.” March 1, 2011
“I think the increase in inflation will be transitory.” April 5, 2011
You are very right on this and remember these so called experts said the same thing in 2008 and were proven wrong and also this latest rise in food and energy is due to quantitative easing from the "Federal" Reserve. Don't be surprised to see a wave of deflation as a result before the central bankers do what they do best which is inflate prices which causes real human suffering.
Recently, a politician ( don't remember who) was speaking to a number of people and mentioned that food and energy were not included. The response he got was unmistakeable that the general public feels this is completely wrong. They told him that food and energy absolutely need to be included. I'm thinking that we ALL need to send this message to the politicians.
My father used to say that: "Figures don't lie, but liars know how to figure."
So, now we know what the politicians have been doing. What's our answer?
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