Monday, April 12, 2010

Can OPEC kill the economy?

If you think the housing bust was about bad loans, yes, a lot of the loans were made to low lifes that knew they could never pay the loan. But, the housing bust corresponded with what, the last rise in the prices at the pump. Most people live on a budget, when the budget is busted, it forces people to makes cut somewhere.
When gas prices hit $4.00 a gallon, not only did effect how much it cost to fill up a car, it did much more. Fuel cost increased the cost of shipping everything. Food went up, airline tickets went up and business's started to suffer. Restaurants and other establishments begin to layoff workers due to the business turn down.
When peoples disposable income began to disappear, their budgets began to get out of whack. Part of the  money they had allocated to help pay the bills started going in their tanks and to pay for the increase in grocery prices.
The economy seems to be slowly recovering now. Jobs are not readily available yet, but small business is seeing some growth, along with housing sales picking up. The American public is still vulnerable to rising gas prices, with a lot of blue collar workers dependent on independent travel to and from jobs, small increase hurt.
If OPEC decides to cut production to increase prices, who will stop them. Oil prices are on the rise again and will probably continue through the summer. This will coincide with summer travel plans with millions of Americans headed on vacation. With every price increase at the pump, they will have to cut something somewhere. One less night at the hotel, one less meal they eat out, multiply this by the amount of travelers and isn't hard to see where this is headed.
If we head into another economic turn down with the unemployment rate already at 9plus percent, around 20percent in the construction field, what happens then. Do we blame this on the financial institutes again? When prices at the pump go up the congress is quick to blame the gas companies and fail to mention the role of our foreign dependence on oil. Do we have a recourse against OPEC creating self imposed shortages, such as cutting production? Price at the pump depends on the price of a barrel of oil.

So, are we headed for another economic slow down, prices at the pump are up now over a dollar a gallon from last year, which is keeping the recovery in the slow mode. If we want to get the economy pumping again, slow down the cost at the pump.

No comments:

Post a Comment