Unless you work for an oil company or have substantial investments in an oil-related business, you are beginning to feel the pinch of the high fuel prices. The problem with fossil fuel is that economies are so dependent on it that even small spikes cause big ripples throughout the society. For most of us high oil price manifests itself at the pump but the repercussions are far more reaching. With winter not too far off, high heating oil prices will follow. Cost of transportation is another whammy which in turn translates to higher prices for the goods and services we all use. From air travel to food, transportation outfits would have no choice but to pass on the extra costs to the consumer. Suddenly everything becomes more expensive.
Sounds like a dire prelude to inflation? You bet. Like a chain reaction, the prices of everyday items would need to rise to keep up with expenses. In a gloomy scenario an ominous feedback loop would form causing spiraling price hikes for just about everything we depend on.
Things were already bad before the hurricane catastrophe. With the supply of oil tight enough already, the natural disaster in the key southern states might have been the proverbial final nail in the coffin.
I can just imagine the auto industry quivering at the thought of Americans abandoning the aspirations of owning large cars for the more economical versions. The wealthy would be fine, but for the many middle-income car buyers who might have been flirting with the idea of owning an SUV, a compact car might start to seem a more rational path.
So where is the silver lining in all this. First of all the government might finally wake up to the fact that it needs to start thinking about alternative methods of generating energy. People would also become more conservation-minded. Maybe that daily commute to work can be more economical using a smaller vehicle, or public transportation, or even self-powered means as in walking or biking. Technology can also play an important role. With many households already on broadband, telecommuting might get an extra boost during these tough times.
We all know that oil is not a bottomless pit. At some point it will run dry. Situations such as the one we are faced with today might be temporary, but it should serve as a wakeup call for the time when we have to carry on with little or no oil. Times like these should be a strong incentive to prepare for the inevitable.
gas prices,oil,alternative energy,fuel,inflation