Originally Posted by nycm'er
BUT you 'old timers' can you explain why you think that a $5 increase in fuel will drastically effect my granola and bike part prices? Even a hundred dollars over several tons of shipped crap, how much could that effect the final price?
What Dobber said...and it's not old timers, it's simple life experience that delivers us from a Utopian view.
Now, since you stayed with my granola and bike parts theme:
Granola is made of oats and other natural ingredients. Oats have to be planted, tended to, and harvested. Each of these steps, to be done efficiently, uses farm implements, moved around by petroleum fueled tractors. Then the product has to be processed and transported to a large shipping facility, which requires electricity (where does electricity come from?) and fuel. Then it is most likely moved by railroad, which requires diesel fuel. Then it arrives at the plant where it is joined by other ingredients which have arrived at this destination by similar means. The plant mixes and processes and bakes and packages the product. Can you guess what the root source of energy for carrying out all of these operations is? Then the finished product is shipped to your grocery store via a couple of more warehouses along the way.
Besides there being many steps of transportation involved, and all the energy required to power the processes, there are people required along the way. The vast majority of these people don't live where they work, so they need to commute, and most commute by some means that use petroleum products. They are going to demand more money in the workplace so that they can continue to commute. The grocery store has lighting and other energy requirements, as well as the same personnel demands.
Do I even need to go into bike parts, or is that enough?
Bottom line is that within about 100 years we have become completely dependent on oil. Some of it's use is certainly frivolous, but since in the U.S., motor fuel accounts for approximately 45% of total oil consumption, it's reasonably safe to say that the guy in the cigarette boat really isn't making that big of a dent. Per capita, yes, but not in the big picture. Regardless of your own personal consumption, increased oil prices mean inflation for everyone. Those driving fuel inefficient vehicles may feel it the most per gallon, but they are also more likely to be able to absorb the costs. Do you really think that anyone that cares so little for how they spend their money (witness the $800 a month payment on his H2) is going to be concerned about spending an extra $50 a week in gas? But how about the single mom driving her 1991 Buick with 135K miles on it that she paid $1000 for and uses it to commute 35 miles to work each day because she can't afford the rent on a place close into town? She's going to feel it.
To simplify: Rise in cost of fuel = inflation. Wealthy people feel inflation much less than poor people. Wealthy people can better afford increases in gasoline prices than poor people. Poor people are going to be more adversely effected by increases in gasoline costs than wealthy people, but everyone will feel it.