Saturday, November 17, 2007

Gasoline Prices Rise, and So Does Everything Else

Gas prices inflation food vs fuel corn ethanolSometimes headlines just write themselves. The Philadelphia Inquirer ran this story this week, that looked at the major impact of rising gasoline costs have upon consumer prices. Most ominous, the article also explored how the latest inflation report has upon the financial markets.
Economists said consumers should brace for a worse performance in November, given an even-bigger increase in gasoline prices so far this month.

"There are no alarm bells going off today, but neither does [the report] provide any wiggle room to cut rates," said Julia Coronado, a senior economist at Barclays Capital, of New York. She said Fed policymakers "have to take the inflation threat seriously."
It really should be no surprise that near $100/b crude oil prices are putting a major dent into the American and worldwide economy. The American economic engine is driven largely by consumers' ability to purchase goods and services. And there is a price to be paid for these high oil costs.
Economists are concerned that rising energy prices will leave consumers with less money to spend on other items and will depress their spending, which accounts for two-thirds of economic activity. That would add to the list of problems already facing a slowing economy.

"Consumers are getting squeezed between falling house prices, rising mortgage payments, and now rising oil prices," said David Wyss, chief economist at Standard & Poor's in New York.
Maybe we should take comfort in knowing that our American dollars are going to work for others.
  • Big Day Looms for Venezuela
    In two weeks, Venezuela could be starting an extraordinary experiment in centralized socialism fueled by oil. By law, the workday would be cut to six hours. Street vendors, housewives and maids would have state-mandated pensions. And President Hugo Chávez would have significantly enhanced powers and be eligible for re-election for the rest of his life.
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1 comment:

Nathan Schock said...

Isn't it interesting how so many of the people who were so concerned about the impact that corn prices were having on food seem so unconcerned about the impact of the rising cost of oil? Let's see. Higher corn prices are raising consumers food costs by a few bucks. On the other hand, higher crude oil is raising food costs by even more, while also slowing the economy, driving inflation and transferring large portions of our wealth to countries that hate us. Which would you rather have?