Crash! Boom! Bang! The Economy Implodes Again
Back in ’06, the housing bubble was beginning to burst. The banks were on the edge of failure. The economy was teetering over the edge.
Anyone remember what actually caused the final tumble into the abyss? Think about it now. It caused you and everyone you know hardship. It increased the price of EVERY commodity that you consumed. That’s right… gasoline broke the $4.00/gallon mark.
There is a magic number that cannot be exceeded when it comes to gasoline prices in this country. In the summer of ’07, that number was the $4.00/gallon mark. At that point, everything went to hell. You were paying much more to commute that 50 mile round trip to that wonderful job of yours. The wife was spending twice, sometimes three times, as much for groceries and other consumables.
Why was that? Well, it’s simple. The entire U.S. (and the world’s) economy runs on oil. That’s the plain truth of it. Nothing gets done, nothing gets delivered, nothing gets made, nothing gets imported/exported without oil. When crude goes to about $100 a barrel on the world market, you can expect prices at the pump for gasoline to begin to approach that magic $4.00/gallon mark again.
According to Bloomberg.com, crude is bouncing around $86/barrel currently. That’s only $14 away from the $100/barrel mark, folks. The usual summer gasoline price increase hasn’t even begun to kick in yet. What’s going to happen when it does? Are we going to see $4.00/gallon for gasoline at the pumps again. It could get UGLY.
For many of us, we’re just now beginning to climb out of the economic rabbit hole that we tumbled into for the past two years. What is $4.00/gallon gasoline going to do to our little recovery? More bank failures as folks default on credit cards and mortgages anew? More companies laying off employees or folding up completely? Massive unemployment? Massive increases in welfare and food assistance applications?
I’m not an economist, folks. I’m just an old biker. What do I know? Think about it, though… when oil makes the world economy go ’round and oil goes up in price, shrinking supply and increasing demand, what do you think will happen? Start stocking up on those cheap canned goods and oriental noodle soups while you still have gas to get to the store.
</rant of doom>
Have fun, kids…
~Eric
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This article was originally published on my Nocturnal Slacker | LockerGnome blog. To see it there and read the entertaining comments, click HERE.
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