Quote:
Originally Posted by Zanshin
retclt - just remember that the types of fuel prices you are seeing in the USA have been around in Europe for many years and life still goes on. |
Without getting into the argument of why the countries of Europe tax
fuel so highly nor the relative productivity of the US vs Europe it is safe to say that the US economy can tolerate substantially higher energy costs and still continue to function quite well. The costs are inflationary and will make certain things more expensive, but probably only over the near term, much as we saw in the 70's and 80's. I'm not hearing anybody expressing amazement that we've had twenty five years of under-valued oil prices. The energy crisis of the 70's spurred the development of a great deal of oil production-so much that it became tough to make money in oil. The American and world consumer were the beneficiaries of it.
By all
lights, according to common wisdom, the Europeans should be suffering even more than we are given the run-up in prices. They are not suffering so much as a good part of the run-up here is not due to oil itself, it is due to the weakness of the dollar. Indexed against the Euro the increase in price looks far less threatening.
The problems in the transportation industry are just those same problems that everyone has magnified. Increased
fuel costs will have to be passed on to consumers. Until freight rates rise, truckers will be suffering. What normally happens in these cases is that alot of the lower tier, less sound, trucking firms who have not made themselves financially solvent during the era of cheap
fuel go under. To the extent that many of these are single
rig owner operators it is lamentable. Those of them who've planned for such a rainy day may well park their
rig and work another job until freight rates make trucking appealing again.
The largest current energy problem we have is nothing less than a weak dollar. There is no shortage of oil, although the US refinery situation exacerbates any hiccups in production. In another thread, the market crash thread, someone asked me about commodities being an international standard of exchange, much like gold used to be. Due to the dollar's weakness we are currently in an era where oil and food are much more the unit of exchange rate than the dollar is. When you are forced to buy your food and oil in dollars you're going to get a lot less food and oil. If food and oil become significantly more costly they de facto become the medium of exchange, in essence replacing the dollar. Strengthening the dollar will go a long way towards alleviating the current situation. Of course, the powers that be seem to be more concerned with Wall Street than Main Street.
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