Saturday, April 01, 2006

Oil: What the Hey? $70/Barrell Again Whoa!

Ok folks, I've been watching gas prices creep and so have you. What's going on?

I'll give you a hint. It's not HIS Fault.

Here's Adrian Jackson's take. Read it and stop being such an ignorant doofus about commodities pricing. It's affecting your every day life whether you know it or not.

A $3.00 gallon of gas is NOT, dear readers, the Oil Companies fault although it is great fun to harass these people. It avoids the uncomfortable job of looking at Congress--those crafty guys and gals who tax the bejeepers out of you and me on gas and who have five zillion steps the refiners have to go through to meet environmental concerns.

High oil prices cause pricing of everything to go up. Your jeans are made in China remember? Before they magically appear at Wal-Mart, The Gap and Polo, they are shipped. This takes oil. Before you buy a loaf of bread, it is transported from the bakery to your local grocery store. This takes oil. Before you buy anything, it gets here from there. This takes oil.

Pray that we don't get anymore hurricanes. Pray double that they don't hit Houston/Galveston. What little refinery capacity we have could be wiped out in an instant ala New Orleans. If you think our oil prices are high now, just imagine $5/gallon of gas.

Keep this in mind too, when environmentalists chant the mantra: "Not in my backyard", when your local government tries to build a new refinery (not that anyone is doing this, the capital investment and margins are so big and so little respectively that any brainy business person wouldn't dream of doing this).

And remember, all these layers of extra pricing get passed along to you, the consumer. Are you paying $6 a gallon for milk? I am. True, it's organic. But shiver me timbers SIX BUCKS! My grocery bill is going up. Thankfully, winter was light. Otherwise the heating bills. The hew and the cry!

What this adds up to, in my not-so-knowledgeable opinion is INFLATION. Home prices are softening. Sales of new homes are down 10% last quarter. Interest rates are rising. Again.

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