Monday, May 21, 2007

 

Other Stuff Takes a Back Seat to Gasoline

We are now told that gasoline is even more expensive than when it was during the 1981 oil shock. And higher prices are just getting started! Apparently — and predictably — consumers are delaying purchases of Other Stuff, or just not buying Other Stuff, in order to free up more money for gas.

The Other Stuff, whether goods or services, is sold by businesses that also need consumers to purchase their offerings, or they’ll go belly-up. But consumers are nearly belly-up themselves, and so the purveyors of Other Stuff have to wait, or just give up hope. People selling big-screen TVs and other consumer electronics, those who need travelers and vacationers to come by car and spend money (restaurants, motels, amusement parks, etc.), and in fact people dealing in everything else but vehicle fuel (i.e., Other Stuff) — these people are all going to be squeezed harder and harder as gas gets more expensive. And when the breaking point comes, businesses dealing in Other Stuff are going to disappear beneath the waves. That will, of course, help precipitate economic collapse.

The only way to keep the petroleum economy going is to maintain the flow of cheap and plentiful hydrocarbons. That allows people to fill their tanks and buy Other Stuff, i.e., to have their cake and eat it, too. Our man W is trying hard to liberate Iraq’s oil for American use, but it’s a going to be a while yet before Iraq’s oil flows liberally, if at all.

So the oil companies are doing well, but businesses selling Other Stuff had better steel themselves for the inevitable crunch.



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