Soaring Gas Prices…The Triple Threat to the U.S. Economy
Soaring Gas Prices…The Triple Threat
Gas prices continue to soar as the national average for gas and diesel prices reach unprecedented levels. If the impact was not bad enough at the pump, the ”trickle down” effect on every item or good you purchase is facing undue price pressures as well. Although our dependence on foreign oil has continued to grow the dramatic upswing in prices is due predominantly to the rising prices of OPEC and other major suppliers raising their prices on barrels of crude oil. Many prognosticators believe that a gallon of gas might well approach the $5 dollar a gallon mark by year end with diesel fuel potentially surpassing $5.60 a gallon benchmark. Although this is affecting all consumers at the pump the most damaging impact in our economy is not at the pump but at the source where all goods and services are delivered.
All companies who transport their products are now paying higher fees for airfare, trucking, and rail with no sector of the transportation industry going unscathed. As the moving cost from suppliers to distributors and then from distributors to retailers increase, the corresponding costs have to be passed along each step of the way. A prudent investor should be able to expect inflation rates to be higher in 2008 than at any time in the last several years as the cost of services and products rise solely to maintain the already slipping margins most companies have been experiencing as a result of a general lessening of economic growth. Also, just as bad things seem to happen in threes so does our economy similarly suffer from first a downturn in the stock market, then a housing/debt crisis, followed shortly by heightening gas prices.
Much of the variations we have experienced in the stock market are part of the normal ups and downs which have occurred for decades and decades. However the housing and foreclosure debacle issues are at previously unheard of proportions as anxious financiers/banks/lending institutions extended credit under relaxed lending criteria. Many of the homes lost in the last months were done from over zealous lenders granting monies and credit to those who otherwise would not have been granted a loan. Also consumers were to blame as they rushed out to obtain loans which extended their credit to such a level that any hiccup in their income stream would dramatically impact their ability to meet their monthly obligations as they became due.
Gas prices now are putting additional stress on an already struggling economy. Whether consumers are in an up or a down economy their living standard and mantra should always be the same “to live well below what their income would suggest they could afford.” Though in tough economic times this will necessitate a bit more belt tightening than we would prefer the precepts are the same. The decline in the stock market continues to offer bargains for those in a position to invest, however rising gas and energy prices are now in a position to rain on our overall economy for many years to come.
-A sound plan to fund Social Security & Medicaid. As the baby boomers age, this issue, if left unsatisfactorily addressed will ail all for many generations to come.
-Fiscal responsibility at all levels of government. Although deficit spending is essential at times, it can never be done at the expense of sound financial management. Prudence in spending at all levels of government rather than special interest are critical to our country’s future.
To help ensure that the United States of America continues to be the world leader in all aspects of world affairs we first need to take care of our home turf. To this end we need to ensure that only forward thinking leaders are elected to any government positions and those to whom are unable to fulfill this requirement are soon booted from office. Our elected leaders need to united today on a non-partisan basis uniting Democrats and Republicans alike to once and for all. We need to demand that our leaders start today passing legislation which will require:
-A more sensible approach to oil research and development domestically. Untested and untapped oil reserves in Alaska and off our coasts should be carefully evaluated and drilled to maximize our efforts in becoming more self sufficient.
-Alternative energy fuels such as bio-diesel, electric, hydro power, and solar efforts should be offered incentives to maximize research and development.
-Our nuclear energy efforts should be resumed while being sure to add sufficient stringent guidelines to alleviate any substantive environmental concerns.
-Required higher standards of mileage per gallon ratings of all types of passenger and trucking vehicles should be mandated requiring automotive manufactures to step up to the plate to do more.
Talk is cheap. Making critical decisions which will impact not only our economy is not for the faint of heart or ill prepared. Tough decisions will have to made at all levels if we are to avoid a burgeoning problem in our economy today and in the future. Write all of your elected officials being sure that they know where you stand on making America a better place for us all to live; your future and that of your children depend on it.
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