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Economy Watch: Look for falling gas prices and increased consumer confidence

Discussion in 'Picture Framing Business Issues' started by Paul Cascio, Jun 22, 2008.

  1. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    I think we're going to see a significant and rapid drop in gasoline prices over the next few weeks based on a number of factors:

    The Saudis have increased production, and it's not just a token amount this time. I believe we will also see speculators taken out of the oil futures market by new rules limiting such actions.

    It seems that the OPEC countries are finally recognizing that consumers are changing their habits and those change may become permanent, a move that will drive oil consumption/prices down, long term.

    Just as high fuel prices have paralyzed consumers and shaken their confidence, a major drop in prices will have the opposite effect.

    I've long observed an uncanilly strong correlation between my previous month's retail sales and the next Consumer Price Index report. Lately, the CPI has travelled in just one direction--down--but that is about to change in a very positive way. Be ready.
     
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  2. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    Mine is not the best-informed opinion on this subject, but here it is anyway: If consumer confidence were predicated only on the price of oil, and if consumers actually were paralyzed by oil prices, and if OPEC production were the only major influence on oil prices, then I believe you would be correct.

    Sadly, I believe that consumer confidence isn't, and consumers aren't, and OPEC production isn't, and you're not.

    It would be wonderful if you're right and I'm wrong. In any case, I think it's great that you are taking a positive attitude here.
     
  3. Richard Darling

    Richard Darling SGF, Supreme Grumble Framer

    I would agree with you, Jim, that gas prices are not the only factor to consider in consumer confidence. On the other hand, the runup in gasoline prices is having a ripple effect through the entire economy (which probably is not finished either). Significant easing of gas prices would certainly be felt through the entire economy, and eventually back to consumer wallets and confidence.

    I tend to believe that oil prices are in a bubble not unlike the tech bubble, housing bubble, bubble bath etc. In time the bubbles usually pop, and little remains of the expanded state. Of course, the media hypes the drop as if horrible things are happening. The reality is the market is simply resuming a normal position.
     
  4. Tom Reigle

    Tom Reigle Guest

    I suspect that all 3 of you have made valid points regarding the state of our economy at present. I won't go so far as Paul C. in simplistic solutions but I do think that, as the average consumer has to pump up to $80 or $90 worth of gasoline into a tank that used to take $40 or $50 worth of gas, they will be more mindful of what is left for their discretionary income for other items and spend less for other things until such time as they feel safe in their usual pattern of spending.

    I know for a fact that I am more mindful of how much money I have in my pocket when I pull into a gas station now. I never gave it that much thought when gas was around 2 bucks a gallon. But now I am putting more 20 buck and 40 buck shots of gas into the tank than I am filling up completely. That seems to sooth the need for such things as lunch money and a few new fishing lures when I go out to shop.

    To be truthful, the Saudis surprised me with this move as I have seen a few reports that lean towards a foreign attitude of "Why should we open our oil reserves to the Americans when they aren't willing to do the same with their oil reserves to help themselves??"

    Makes ya wonder who is making the most sense sometimes?
     
  5. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    Tom,

    I suspect that they might be nervous that we might develop some of our own reserves and figured the best way to stop that politically is to back off the price pressure.
     
  6. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    That's true Pat. If it becomes profitable enough, we can harvest oil using methods that previously were not profitable.

    Also, consumer habits change to compensate for high fuel prices. I think I read recently that American drove 1 billion less miles last month. That's a lot of gas that was saved. Combine that with a tendency to buy fuel efficient cars, and long-term demand get dramatically reduced, further reducing prices.

    Back in the late seventies, there were gas lines and high prices that eventually subsided.
     
  7. Dermot:

    Dermot: In Corner

    There is a danger when talking about oil prices to simplify the process back to just gas/petrol for cars……………..when in fact oil prices impact on just about every other thing we spend our money on…………..oil is even impacts on those of us who try to be green by cycling………..the reality is that eventually the price of oil will impact on the cost of what a cycle costs to manufacture…….

    I suspect that Paul is correct about people driving less……….however what are they doing with the time they spent in the car………..possibly at home watching TV and using…..power (read oil)……

    My own feeling is that concentrating on the cost of oil (read gas) is just a distraction to resolving how we will change the way we live and over all use less oil…………and then untimely find newer sources of power…………

    I like these sorts of threads about “change” they have a way of stretching ones thinking…..
     
  8. Dermot:

    Dermot: In Corner

    BTW the Saudis have already upped the output of oil……….to very close to the maximum they have the capacity to produce ……….one of the big problems in production is in Iraq which is presently only able to produce about 50% of what they were producing back under Saddam……makes one wonder………..who is making decisions about how we power the world….
     
  9. Rick Granick

    Rick Granick SPFG, Supreme Picture Framing God

    I wouldn't be surprised to see a short-tern fall in gasoline prices for a few months preceding the election. Don't ask me why...just a hunch. :icon11:
    On the other hand, if Cheney...oops I mean the U.S., or Israel attacks Iran between now and then, all bets are off. Could be another 1970's gas line scenario as well as uncontrolled inflation because of petroleum's importance to so many activities as Richard pointed out.
    :kaffeetrinker_2: Rick
     
  10. JRB

    JRB PFG, Picture Framing God

    The oil companies now know for a fact that we will pay four or more dollars a gallon for our gas. Any reduction on their part from this point on will be minimal and temporary. Even if the oil companies decided to make a major reduction in the price at the pump, say a whole dollar, it would be replaced by taxes. The government has also noticed we are willing to pay four or more dollars a gallon, so any savings the oil companies give us will be quickly gobbled up in new taxes.

    Out government is desperate for money and will use any legal means in its power to find ways of getting it. Heck, they tried to sell out ports to the Arabs, and would have done so if not for the media picking up on it.

    Paul's outlook sounds promising, but I don't think it can happen. As far as the economic downturn is concerned, I don't think we are remotely close to the bottom yet, we have a long way to go.

    This is not your typical recession, this is a big one. OPEC is already pumping at almost maximum capacity, lowering prices by increasing volume is unlikely. It is also unlikely that they could reach any meaningful consensus on reducing their selling prices.

    I think we have to continue digging in for the long haul.

    John
     
  11. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    I think you will see further drops in consumer confidence once the news of the next crash becomes known by the public. The bond insurers are all being downgraded which means that money market funds MUST sell the bonds that are insured by those which have been downgraded.

    The massive glut of bonds being dumped on the market will cause prices to plummet. Many banks will see these money market funds drop below par value or 100 cents on the dollar. This happened early this year and the banks made up the difference with cash on hand. They don't have the cash to do it again.

    Several small regional banks and large investment banks will fail as evidenced by the Feds urgency to put a system in place to allow them to be absorbed into the system much like Baer Stearns but at less expense to the tax payers. This is going to be a very difficult task given how many regional banks lent tons in development loans which are now worth 30-50 cents on the dollar.

    This coming week will have a lot of new developments, none of which will be good.

    As far as oil prices the one way to assure a drop is for the US to start punching holes in the ground. OPEC has control of the flowing oil market and will drive up production, lowering prices, only if their monopoly is threatened. An increase in production would make it unprofitable for continued new exploration and return the system to Status Quo.

    Congress could resolve the issue in a day by giving tax incentives to oil companies for exploration. The big, bad oil companies would then spend their profits here in the US creating millions of jobs. Those jobs would lower unemployment, increase tax receipts and cause consumers to spend more because everything we consume is tied to crude oil and fuel prices.

    Picture framers could then keep their stores , jobs and homes since the financial wheels would be turning again.
     
  12. JRB

    JRB PFG, Picture Framing God

    I do not think the oil companies will be encouraged by anything more than lip service to punch holes in the ground. Bush is just running off at the mouth for political purposes. He knows there will not be any serious drilling in this country for many years.

    The oil that is available under our dirt and off our coasts will not be fully exploited until the Arab countries start running dry. Our oil is part of our national security. We do have an oil reserve, however, that will not be tapped into until we can not get oil from other countries. That is going to take a lot more time than most of us "boomers" have.

    John
     
  13. Jay H

    Jay H PFG, Picture Framing God

    We just got done with a baseball tournament so forgive the analogy. You can only pitch a pitcher 6 innings a week. Most teams have 2 good pitchers and rest is a crapshoot. A common mistake is not pitching good pitchers and lose the tournament with your good pitchers ridding the pine because you might need them later.

    If trouble in the middle east happens quickly, we are doomed. We can't sit aside and wait and just get our own oil when its convenient. We could loose the game and never tap our own resources.

    John I agree that those reserves that we know we have provide some security and self sufficiency. They won't do any good if we need them tomorrow. It will be too late.
     
  14. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    I think prices for oil and natural gas will continue to fluctuate, and Paul may be correct that oil/gasoline prices will take a big dip in response to good news about OPEC production.

    But here is the part that got my attention:

    I believe American consumer confidence has been shaken so severely, in so many ways, for so long, that it will take a near-miracle to trigger quick improvement. Americans may be the most resilient consumers in the world, but when our confidence weakens, our caution strengthens. When pump prices drop, our rejoicing will be buffered by the reality that any number of unknown factors could make them go right back up again. Once burned, twice shy.

    American consumer confidence surely will improve, but not quickly. We are at the beginning of a recession. I hope it will be mild and short-lived, like all of our other recessions since the 50s. But in the best-case scenario, I guess we might reasonably expect to see consumer confidence improve to late-90s levels no sooner than one year. If we're lucky.

    Let's look again in late November. I suspect a lot of political promises and expectations will come and go, and a lot of consumers' minds will change by then...for better or for worse.
     
  15. EllenAtHowards

    EllenAtHowards PFG, Picture Framing God

    I'm willing to bet that at least one of the preceding posts will be proved right.... hehehe
     
  16. TurnerAssociatesdy

    TurnerAssociatesdy CGF II, Certified Grumble Framer Level 2

    I feel we have let the game go on to long. That is why we are being forced to pay these prices. If we had elected officials that were looking past the first inning, a few years ago we might be in the game now. Drilling, windmills, hybrid, or combination of these will most likely be needed in our future. Hopefully we can now step into the future and realize gas alone is not the answer.
     
  17. mayos

    mayos MGF, Master Grumble Framer

    I tend to believe that gas prices (crude oil) will decrease in the coming months. The Saudis didn't' decide to up production just because they're nice people. They know the American public is getting sick and tired of paying high prices for their fuel. I think they fear the high cost of fuel will only accelerate the American drive for alternatives to fossil fuel. So it's in their best interest to keep us un-motivated, as far as alternative fuels go.

    Also...they know the high fuel prices are having a dramatic effect on the economy of the US. They need to keep our economy healthy so they can continue to get all those U.S. $$ coming their way. They, or any of our other trading "partners" know that if our economy fails, they stand to suffer too.

    I think oil prices will begin to decrease and I think that will have a positive effect, but I'm wondering that IF that does occur will the decrease in prices be reflected in the other commodities that have risen because of the high price of oil?? I think any positive news for the consumer will have positive effect in the economy. And positive thinking by the consumer will go a long way toward ending our recession.
     
  18. Baer Charlton

    Baer Charlton SPFG, Supreme Picture Framing God

    The Saudi's will be upping production slightly... but just enough to tumble the speculators and return the price control to true production......

    but it doesn't matter..... they don't ship gasoline or even diesel.. they ship crude. And when it hits our shores there is nothing we can do. All of the refineries have been running flat out or close to it for a few years now.... we have no more capacity to refine more oil into the fuel pipeline.

    We haven't built any new refineries since 1976. No body wants them in their back yard, eco-freaks go epileptic at the thought of more, and they take 10-15 years to start from ground zero to output.

    my 4 cents.
     
  19. couture's gallery

    couture's gallery PFG, Picture Framing God

    you are right, Baer, the capacity to refine is maxed out and no new capacity is on the horizon...no matter how much crude yoy can get it will bog down at the rafinery level, hence , no more will really be available unless you want a barrel of crude sitting in your garage.
     
  20. JRB

    JRB PFG, Picture Framing God

    Whatever happens with the availability or non availability, we have demonstrated our willingness to spend the money on fuel. Do not expect some low cost replacement fuel to hit the market, it will not. If they discover anything, it will cost the same or more. They will tout that it is a more efficient fuel, but the only thing efficient about it will be the rate it can transfer your bank account to theirs. We have paved the path to higher prices, there will be no going back now.

    I just purchased one ready made frame up in Los Angeles for $132.00. I made my sale based on that quote. The frame arrived, packing in a cardboard box was around twenty dollars, and shipping via UPS was just a hair under $100.00.

    Fortunately for me, I quoted enough so that I will still make around $75.00. I will use that money for gas.

    John
     
  21. DLB

    DLB MGF, Master Grumble Framer

    Paul, unfortunately, they upped their product by only 200,000 barrels per day. As far as world demand goes, that's a drop in the ol' "barrel."

    The US consumes over 8,000,000 barrels per day alone. China's demand keeps increasing. There isn't really a way around this at this point. I think these prices are here to stay. Don't get me wrong, I would LOVE to see fuel back down to $1.50 a gallon for diesel, but I don't think that is going to happen.

    And just for the record, the oil prices today are higher than those were paid at the end of the 70's during the crisis (with the adjustment for inflation).

    Notice we don't have lines around the block for gas? That's because people weren't exporting oil, specifically the Iranians. So with prices where they are now, we're in an even tighter spot, because if a conflict breaks out, we're going to be hurting even worse. Cut production by a third, and we'll be paying $6-7 per gallon.

    Because everything is shipped to somewhere else, that in turn will cause prices to rise dramatically on all mass produced goods. CPI will not fare well from that. I was appalled at the price for a loaf of bread the other day. $3.29!!!! I'll savor those peanut butter sandwiches as they're only for the rich now.

    dave.
     
  22. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    Here's another perspective on world oil. More questions than answers, really. But it's fun, and a little scary, to speculate...

    As other countries, such as China and India, ramp up their industrial activity, their consumption of oil will continue to increase. In another fifty years, we and the other heavily-industrialized countries might have used up most of the world's oil reserves, other than our own.

    And if we continue to out-source our industrial production and our technology as we have in the past three decades, what will drive the great American economy? What will we produce fifty years from now?

    Consider that those in the Middle East will probably be among the first oil-rich countries to run out, and it could happen within the next five decades. What will they do then? Will they have invested their vast oil income wisely, so that when the time comes, they can maintain economic stability after oil? Or, will a few families have absconded with all of the money? How will that region fare in the next century?

    The USA is among the most oil-rich countries on earth. Our proven reserves rank the USA fourth or fifth in the world, as I recall, and new scientific evidence hints that we could have even more oil within our borders than we thought.

    At the same time other nations are running out of oil, the USA -- presently the world's largest oil consumer -- may begin to tap its own reserves, and could become one of the world's largest suppliers of oil. By then, technology might have advanced to the point that we could harvest and refine all of this oil 'greenly'. And by then, maybe we will have developed alternative energy sources that would reduce the rate at which Americans and the rest of the world consume oil.

    Will the USA become the world's largest producer of oil? If alternative energy sources replace oil in the future, will American oil have the significant value that it would have today, if we were tapping it?
     
  23. Dermot:

    Dermot: In Corner

  24. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    Dave, the CNN/Money article that prompted this thread showed a nearly 10% increase in output, of 700,000 barrels/day. Unfortunately, there does seem to be conflicting info from other sources, so it's hard to know which is accurate.

    http://money.cnn.com/2008/06/22/news/international/Saudi_summit/index.htm?postversion=2008062214

    If it's only 200,000 B/day, I would agree that it simply isn't enough to make a difference.
     
  25. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    The increases listed are only for a one month period such as the 300,000 barrel a day increase during the month of May. This one is scheduled for the month of July.

    At the same time US drivers have already reduced driving by 20 billion miles year to date in 2008.

    Raising interest rates would strengthen the dollar and since oil is priced in US dollars word wide, this would lower prices. The dollar is weak because foreign investors can get better returns by investing in other countries debt.

    Now the question is, does the fed try to help homeowners and lenders by holding down interest rates or do they help all Americans by raising rates. While the fed fund rate does not have a direct effect on most mortgage interest rates they do have direct effect on Equity Lines and credit card debt.

    I believe that the best solution is to raise rates and let the inevitable happen such as more loan defaults and lender/bank defaults. This is not a popular opinion since so many home buyers/owners bet the farm on the continuing rise in housing prices. ALL BAD DECISIONS HAVE CONSEQUENCES EVEN THOSE MADE BY THE POOR MISLED HOME BUYERS THAT BOUGHT 4 OR 5 HOMES AND ARE NOW AFRAID THEY WILL LOSE THE HOME THEY HAVE TO LIVE IN.

    Same goes for the home owners who refinanced their home every 3 months taking 20-100k cash out every time. We are quick to look down on individuals that get in trouble by running up 100k on credit cards and default. Mortgage loans were used in place of credit cards over the last 5 years.

    Sorry to be negative but all of those home owners that everybody wants to bail out are the ones that caused this mess.
     
  26. Framar

    Framar SPFG, Supreme Picture Framing God

    So, Jeff, what I believe you are saying is that my brilliant idea of refinancing my mortgage to pay off my credit cards so I can buy some gas is probably not a good one?
     
  27. DLB

    DLB MGF, Master Grumble Framer

    Here is an article that supports Paul's observation that oil prices will go down. I don't know about the CPI following inversely, but who knows.

    Also, it cites a number in there that they will boost production from 9.5 million barrels/day to 9.7 million.

    http://online.barrons.com/article/SB121400286913193263.html?mod=googlenews_barrons

    dave.
     
  28. HB

    HB SGF, Supreme Grumble Framer

    John...what makes you think that we wouldn't pay $10 gal just as we now pay $4

    Those >?#$(*^$% have us and they know it!

    Its time A government stands up to them

    But don't hold your breath! They run the government.
     
  29. AnneL

    AnneL SPFG, Supreme Picture Framing God

    Last week, China took subsidies off their own oil and gas prices. Analysts predicted (and the Chinese hoped) this would stabilise or lower the price of oil on the commodities market worldwide. Instead, the price went up causing the analysts to declare they can't predict the oil prices anymore since they don't react as expected.
     
  30. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Actually that is not that bad of an idea providing that you stop using the credit cards and get a conventional fixed rate loan.

    Many people would be surprised to know that by rolling all of your debt into your mortgage can be the best idea providing you are disciplined enough to do the following.

    First use an online mortgage calculator to do the numbers. If you carry $1000 in monthly payments on consumer and auto loans and roll the total into your mortgage AND CONTINUE TO PAY THAT AMOUNT AGAINST YOUR MORTGAGE BALANCE MANY PEOPLE WILL FIND THAT EVERYTHING THEY OWN WILL BE PAID OFF IN 5-7 YEARS.

    Do the numbers and you may find you can be debt free including your home very quickly. Only issue now is will there be enough equity to pull it off after all of the speculators have destroyed the housing market nationwide.
     
  31. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    The oil doesn't have to be flowing in order to affect the price. The process of getting to the oil must be set in motion in order for the price to drop. OPEC does not want competition. When the wheels are turning competition is on the way. OPEC will boost production.

    The problem is getting the wheels in motion. Congress (Dems) want a windfall tax on oil company profits. As long as that threat exists the oil companies will not spend that money on expanding capacity. Tax breaks for new expenditures will get them to spend that money quickly.

    Should congress get their way, the windfall tax money will be pizzed away and do nothing to fix anything. It will be used to create larger government that will become a liability to taxpayers for decades or even centuries. Sure it will dump 10-50 billion into the economy for a minute but in the end we will be in the same situation but only with more tax bills for the citizens to pay in the future.
     
  32. Dermot:

    Dermot: In Corner

    I agree Jeff we got more or less there same advice, except we never had credit card debt, however we did have other loans etc………did the numbers when I stopped framing about 3 or 4 years ago, rolled everything up, upped our repayments on the mortgage, etc. …….the result ……we knocked 11 years off our 20 year mortgage …….

    We are now debt free and have a very nice bit of cash in the bank….which is growing very nicely.

    The new business is going well, it is at break even and on target to meet my expectations in 2 years time…….of reaching the earning capacity I expect from the business……….I’m making a much better success of the new business than I ever did of framing….

    I won’t comment on Jean other than she never stops to surprise me with her capacity to earn money……..I wish I had the same touch….


    :D
     
  33. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    I don't think we would have to pay $10/gallon. Everyone in the supply line is trying to sell gasoline, and a price that high would have disasterous effects for future of the oil industry.

    For one thing, $10 gasoline would quicken development of alternative fuels to the speed of light, and there would be no turning back to oil.

    American drivers have significantly reduced their gasoline consumption this year, by driving fewer miles, and by driving vehicles that get better mileage. Take a peek at the article links below.

    By the statistics, it looks like there must be a lot of SUVs languishing in suburban driveways these days, while their owners choose to drive their smaller cars, instead. Apparently this sudden reduction is stunning; it seems that nobody expected we could react so dramatically and so quickly. Ah, yes, Americans show their resiliency once again.

    The Saudis may be increasing oil production in order to reduce pump prices and give American drivers an excuse to fire up those Hummers, Explorers, and Suburbans again. Will it work?

    http://www.dot.gov/affairs/fhwa1108.htm

    http://www.nytimes.com/2008/06/19/business/19gas.html?_r=1&ref=business&oref=slogin

    http://www.marginalrevolution.com/marginalrevolution/2008/05/americans-drivi.html

    http://www.cnn.com/2008/US/05/26/gas.driving/

    http://www.cnn.com/2008/US/06/18/driving.cutbacks/

    Government probably will not provide a good solution to this problem, HB. If we're lucky, Congress will continue to do nothing for at least another year. Our Federal government would never have the good sense to stay out of it on purpose and let the market prevail, but this is one time when Congressional inaction might accidentally be correct.

    Most of the actions proposed by Presidential candidates is nothing more than rhetoric at this point. Let's hope it stays that way. Government actions could trigger unintended consequences, as they did in the 70s. What a mess that was.

    Back in the 70s, we would have been better to reject government intervention and tough it out. The situation today is different, and worse than it was then. There are no quick answers, and there is little hope of restoring favorable market conditions through political or legislative actions.
     
  34. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Dermot,
    Nice to hear a voice of sanity. Aren't you glad you did not take an Option Arm in hopes that the Fed Funds or LIBOR rate would reach NEGATIVE 7% so you could continue to receive that 1% introductory interest rate.

    People do more research in buying a computer than they do buying a mortgage. I'm sick of hearing about people who say that they didn't know their rate would go up. The ARM Rider says right there that the rate will equal the Index (Treasury or LIBOR) plus 7%. Even if the Index is at Zero anybody should know that the rate must adjust to 7%.
     
  35. Dermot:

    Dermot: In Corner

  36. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Very interesting information from the Dept. of Energy. This is what we have to fall back on in the case of a supply disruption.:kaffeetrinker_2:

    http://www.fossil.energy.gov/programs/reserves/spr/spr-facts.html


    I wonder if we started selling it onto the open market, could we affect the price of oil quickly enough to not put ourselves at severe risk.:soapbox:

    At todays prices that would give the US a $70 billion profit. :beer:

    Let's ponder this for a minute.:confused:

    I added the critters so I wouldn't always come off as being mean.:icon19:
     
  37. JRB

    JRB PFG, Picture Framing God

    I think the answer is in the above post. It is not the price of gas that is dragging the country as a whole down, it's the interest everyone is paying on the credit card debt and other loans. The average family is spending a whole lot more on interest than it will ever pay for gas. At least gas is a real commodity that you can use, so you are actually getting something for your money.

    Credit card interest is at a rate that makes gas downright cheap by comparison. You charge up a bunch of #### on your credit card, then end up paying three to four times what it would have cost you had you just paid cash for it. The heck of it is that had you been paying cash, you probably would not have bought it in the first place.

    Think of what has been happening with all that credit card interest over the years. The banks became flush with cash, they made risky loans with it, because they knew much more was pouring in every day. They have been collecting many times more on credit card fees and interest than they could ever get for a standard loan. I guess I could go on and on about what became of all that interest, the point is, it did little good. It does absolutely no good for the poor saps who are paying it every month.

    I have never met one person who owns a credit card who does not insist that they pay the balance in full every month. Somehow, I doubt that.

    The biggest thing that is going to get this country back on track is not lower gas prices, it's less debt.

    Savings? I talk about having a savings account and people think I am nuts, the craziest thing they have ever heard.

    Nothing is going to change for the better until people start saving at least a few bucks every month and they start dumping their credit cards.

    John
     
  38. mayos

    mayos MGF, Master Grumble Framer

    From what I read, it appears the American gas consumption may have peaked in 2007. As someone said earlier, Americans drove 1billion miles less in May than they did the previous year. It shows that we ARE rebelling against price. Mass transit ridership is way up. Amtrack is adding cars (when they have them). If this continues, I believe it won't be long before people constrict their usage enough to make an impact in the pricing. I have a difficult time believing this is a "supply/demand" issue. I think the elimination of regulations on the trading of oil has done more to affect the price than the world's demand. It's estimated that if the price of crude oil were predicated on supply/demand alone, the price of a barrel of crude oil would be somewhere between $55 and $65 per barrel. THAT may be where the "supply/demand" comes in. Not from the actual consumption of the fuel, but more the supply and demand of the commodity traders.

    The Middle East cannot afford to allow our economy to go into the dumpster. I believe they're also smart enough to know that we WILL find alternative means to fuel our vehicles if the price get too high. Did you see the news clip today about a company named LPxxx (I can't remember the rest of the name). They're a bio firm who now have bacteria producing crude oil. To date they've produced several gallons of the oil and expect to be able to produce several million gallons per year by the 2010. It's certainly not enough to wean us off fossil fuel, but the technology is coming around.

    There are changes in the wind.
     
  39. Emibub

    Emibub PFG, Picture Framing God

    I don't want to get into this too deeply but my feeling is that most of those people knew it would go up but they gambled hoping they would be able to refinance again before the payment ballooned.

    I refinanced my house before I bought my store 7 years ago and one of the possibilities discussed was a variable rate loan that would change in 5 years. It was a huge gamble and my mortgage broker advised me I should have a good idea where I would be financially in 5 years. Little did she know I was about to become self employed. It was too risky so she structured a first and a second I could live with and still keep my payments about the same I was paying before the refinance. I'm so grateful to have received good solid advice. I look to them for the answers since they are the experts. Who knows, I might have been swayed otherwise with a less conscientious broker. Lots of people got sucked into those loans based off of advice from the people structuring their loans. Yes, they made bad decisions, but I think the financial institutions who made it so easy for them should share the blame too.
     
  40. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    You are right about that. So far the piece that the financial institutions have absorbed for their bad decisions at last count is $398 BILLION in losses. That is about 10% of the total losses that will be realized when it all shakes out. CitiBank had to borrow $11 BILLION from the Saudis at 15% interest to stay afloat.

    Did you buy any stocks that some Huckster was telemarketing? The hottest IPO (Initial Public Offereing) of a company that was going to be the hottest thing since sliced bread. Of course not because it was risky. You could have bought in for as little as $500 but you took a moment to consider the downside, you would be out $500.

    Why not apply the same logic to the single largest asset most Americans will ever own. Telemarketing is telemarketing. The more you have at risk, the more thought of "TOO GOOD TO BE TRUE" should come to mind.
     
  41. JRB

    JRB PFG, Picture Framing God

    As long as China subsidizes the gas prices for that country, even if we stopped using gas completely, it would have little affect on the price.

    We are used to seeing pictures of China of muddy little peasant huts and rickshaws, they do not show us what China is like at all. Their smaller cities make New York City look like a very old little town. They have freeways that are as congested as Los Angeles. China is a huge country with huge, more than modern, cities. There are as many, if not more automobiles in China as there are in this country on their roads. Very few people in this country seem to be aware of the colossal magnitude of China, or how modern it actually is.

    The Chinese love SUVs and could care less how much fuel they burn, because they get subsidized fuel. Real estate in China is considerably more expensive than in the U.S.

    Like I said above, it ain't the price of gas, it's the amount of our debt and our unwillingness to save even ten dollars a month. We do not believe in saving for anything.

    That is what is probably the biggest contributor to our down economy, lots of debt, no savings.

    I think if our Congress passed a law mandating that every adult citizen put a minimum of ten dollars a month into a savings account, the people of this country would go nuts and demand the head of every congressperson who voted that law into effect. It would be as bad as if they declared there is no God.

    John
     
  42. AnneL

    AnneL SPFG, Supreme Picture Framing God

    They took the subsidies off last week. The effect on world oil prices wasn't what was expected. The Chinese people, predictably, weren't happy.

    Currently the fastest growing investigation branch of the FBI is in the subprime loan mess. As of last week, they had arrested over 400 people for fradualent loan practices.

    We actually had a commercial loan officer last year that must have got his training in subprime loans. He out and out lied to us about payments, rates, etc. when we went to renew our business loan. Luckily, I'm the type that reads the fine print. I switched our loan to another bank that was only to happy to do business with us at a rate and payment we could afford with no tricks or hidden costs.

    JRB, what if what you charge on your credit card is gas? :shrug: (You don't have to answer that. I'm just being facetious.)
     
  43. JRB

    JRB PFG, Picture Framing God

    The Chinese Government boosted the price of gas in their country up another 18%. That makes the price of gas in China $3.00 gal. They did not stop subsidizing gas at all.

    Buying your day to day necessities such as groceries and gas with a credit card is probably the saddest example of American stupidity that could ever be made.

    That is, without a doubt, one of our most shameful things wrong with our society, besides homeless people living under bridges and in culverts, and families with no medical insurance.

    People who are paying so much in interest every month that they can not afford basic necessities. It's like a dog chasing it's tail, with no end in sight.

    What blows my mind is that they have no qualms about making minimum payments on their credit cards, sometimes costing them thousands of dollars every month, just in interest alone, yet they howl about their gas costs going up $100.00 a month.

    They get their ridicules credit cards to "establish credit" and for "emergency's"
    Yet most are so far in debt with all their cards, they are in no position get any meaningful credit or be able to pay for even the smallest emergency.

    John
     
  44. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    John, you've touched on something that has bothered me for a long time--credit card companies. IMO, they are one of biggest parasites in the business world.

    These companies have such a racket going that it's ridiculous. They charge outrageously high interest rates to borrowers. Then, they suck 2-4% out of the economy via merchant "Discount" fees. But wait, there's more, because they then encourage consumers to "charge everything" so they to earn rewards points.

    That still wasn't enough to satisfy their greed however, so they came out with debit cards. Now, transactions that previously were paid by check, and incurred no merchant fees, are being taxed by the CCCs.

    Of course, even that didn't satisfy them, so they lobbied congress to change the bankruptcy laws so that credit card debt is no longer eliminated when a person files bankruptcy. These companies operate like heroin dealers and get away with it.
     
  45. Rick Granick

    Rick Granick SPFG, Supreme Picture Framing God

    What really gets me is that we have to pay the credit card fees on the SALES TAX that we collect too...and it isn't even our money. So in effect we act as unpaid collection agents for the state, and then have to pay the CC companies for the privilege of doing so.
    :soapbox: Rick
     
  46. Dermot:

    Dermot: In Corner

    I think we might have a plan to beat the oil pricing in Ireland.. :icon21: :smileyshot22:

    24 June 2008

    Seaweed offers bright future for biofuel industry

    By Ray Ryan, Agribusiness Correspondent

    IRELAND could become a key player in the production of biofuel from seaweed, a conference was told inGalway yesterday.

    Dr Stefan Kraan, manager of the Irish Seaweed Centre at the National University of Ireland Galway, said Ireland, with its rich, sustainable, seaweed resources, is poised to become an important player in the next generation of biofuel production.

    He was addressing over 400 delegates at the annual conference of the International Society for Applied Phycology, the scientific study of algae.

    Ireland boasts 16 commercially useful seaweed species, with additional ones being added as more research is carried out.

    The conference was told that Ireland’s location off Western Europe, surrounded by clean seas, is a major selling point to the world market. Current uses of seaweeds in Ireland are as foods and food supplements, fertilisers, liquid seaweed extracts, soil conditioners and animal feed supplements.

    Seaweed is also used as raw material for cosmetics, body-care products, sea water and seaweed treatments, medical preparations, biotechnology and biomedicine.

    Dr Kraan said seaweed has long been investigated as a potential source of bioethanol, which is typically made from crops such as sugar cane and corn, but technological barriers remain to its commercial use.

    "Algae do not have the negative image of terrestrial biomass resources, which are said to be responsible for higher food prices, impacting on water use, biodiversity and destruction of rain forest.

    Professor Michael A Borowitzka, Murdoch University, Australia, who delivered the keynote address, said, compared to other bioenergy crops, such as rape seed, canola, peanut, oil palm, there are a number of species of algae that have higher areal productivities, higher oil content and that can grow in saline waters.

    Professor Borowitzka said for biofuel production the algal biomass needs to be produced at a cost of around US$1 or less per kg.

    Source: http://www.examiner.ie/story/business/gbojqlcwoj/rss2/
     
  47. JRB

    JRB PFG, Picture Framing God

    I think we have one silver lining to this cloud of doom..........Our great and glorious president, George Bush!

    The day he leaves office, and I don't care if Bozo The Clown is replacing him, will be so uplifting to the American people, and probably most other people on this earth, that some of the celebrations may include an increase in spending.

    This is assuming they have anything left to spend when he is done with us.

    John
     
  48. Paul N

    Paul N In Corner

    After 8 years of uncontrolled borrowing and spending, I doubt it. But I'd like to be optimistic.
     
  49. Bob Doyle

    Bob Doyle SPFG, Supreme Picture Framing God

    You know after he leaves office I don't think I'd be willing to pay to hear him speak. However, if he is at the County Fair, at the dunking booth, I might be inclined to spend a little time there!

    Maybe the "revenue" from the booth could help pay down the debt!
     
  50. JackBingham CPF

    JackBingham CPF MGF, Master Grumble Framer

    Oil prices "will not come down," OPEC president Chakib Khelil said Tuesday, assuring that the oil cartel has already done what it can on the matter.

    "OPEC has already done what OPEC can do and prices will not come down," Khelil told journalists as he arrived for a meeting with EU energy officials in Brussels.

    http://www.breitbart.com/article.php?id=080624082624.w60gqlcj&show_article=1

    Jack
     
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