Monday, September 12, 2005

How oil prices are effecting the world economy right now

So it's a given in my book at least that despite the moderate price drops in the past few days, the price of oil is not really going to go back down. This is already beginning to affect very many sectors of the economy--aside from consumer gasoline prices. You think $3 at the pump is rough? Airlines are feelin' it a bit more than you are...

US airline losses in 2005 could reach USD$10 billion, due mainly to soaring fuel prices made worse by Hurricane Katrina, the industry's chief trade group estimated on Friday.

(click above to read the rest of the article)

It will affect the price of things that don't seem to be dependant on liquid fuel, too. The food you buy at restaurants and at the grocery store travels an average of over 2000 miles to get to its final destination of consumption. Most of the goods you buy at wallmart were shipped 5000 miles from southeast asia. trasnportation costs are only a very small part of the price of goods and food, but consider this--the shipping industry is probably feeling it as much as the commercial airline industry. shipping goods from china to boston may be cost effective for the retailer, the manufacturer, and the consumer, but it is quickly approaching the tipping point of not being cost effective for the shipper!

again--we're not running out of oil, we're running out of cheap oil. we've got lots left in the ground but it's mostly of the heavy/sour crude variety and is very difficult both to extract and to refine.

ok, i'm off to the train. i'll be walking home from the train station this afternoon. the car is planted in the driveway, where it shall remain for the foreseable future.


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