Is America ready for what's coming?

This morning over breakfast, I heard a cook in a restaurant comment that a large container cooking oil had risen in price from around $13 to over $60 and that a bag of flour and risen from $8 to over $30 (if I heard right and a blog post here seems to suggest it's not far wrong.) Last year the minimum wage went up about 12% and this year it is set to do the same ($5.85 (2006) -> $7.25 (2008)) In a recent article in a Nevada newspaper, the state was casting doubts over its wage rise for state workers due to a drop in its revenue - a cost of living increase of 4%. Question is, how would those people make do without it?

What's the root cause? Hard to say. The price of gas is not tipped to drop until at least 2016 as the futures market for oil has already sold supply to that date at current prices. But maybe that is a dream and the more realistic picture is the price of oil is not ever going to go down to where it was. The oil honeymoon is over.

So what has this got to do with the title? America, as a nation, runs on oil. There are a few hold out examples, such as New York City, Washington DC, Chicago, Boston and San Francisco (city area only) that have functional mass transit systems. Expand the view to, for example, the entire San Francisco Bay Area, to places such as Silicon Valley, San Jose, there is barely any worthwhile public transport. Now get out to some of the other populous cities, such as Los Angeles, Las Vegas, etc, there is a bus system that kind of works, but anything else...where's your car man?

It would seem that the basic cost of a lot of things is going to rise this year and next, perhaps pushing many into poverty. But something that cannot be missed is the amount of money that these rises are going to take away from the average person on the street, giving them less discretionary spending. This won't necessarily show up in the US GDP figures, as people will still be spending the same (or more) money but the fraction that goes to transport and food will increase, meaning something else will have to give.

A shift away from driving (too expensive) and maybe smaller portions of food (keeping cost dost.) Is America ready for that? Or will it go for the same size food portions, albeit more expensive, and find more fuel efficient vehicles and keep on polluting?

For further reading:


Cant say that Im not happy to see that americans are finally living like us... The "rest" of the world.

"Now we need to use bus to go to work ? My god, its the end of the world"

Posted by HangLoose on May 24, 2008 at 04:40 PM PDT #

[Trackback] Jim 和 Darren 同时写了篇关于油价的博克。两人都从消费者方探讨。其实油价对美国的工业的打击更大。许多人不知道美国工业是靠油撑住的。加州的中央谷地,衣阿华的玉米田,堪萨斯的牛群。美国各地早已专业化,只生产单一产品。有名的州际公路是循环系统,油就是中间流的血液。它带进活命的养分,拉走致命的毒素。 美国的玉米业完全靠石油做的肥料。玉米价格影响超市中过半的货品。 有个“探测”行的朋友告诉我世界上其实石油多得很,够用许多许多年。只是成本的问题罢了。好开的油田差不多了。难点的油田,需要高技...

Posted by Whiteboard Infinity (ZH) on May 25, 2008 at 07:23 PM PDT #

[Trackback] Jim and Darren blogged about the possibility and probable impacts of very high oil prices. They both focused on consumer behavior. At industrial level, oil prices will have an even greater impact. Unbeknownst to many, US industries feed on oil t...

Posted by Whiteboard infinity on May 25, 2008 at 07:23 PM PDT #

Well oil prices here in Argentina are kind of twice the cost of the US, car taxes are high, public transportation sucks... and that all affects economy, but we somehow manage.

It does present a constant choice process, sometimes you think, do I want to drive there or walk and have a nice bite? Not everyone is in that bucket, but it is not something you don't think about every now and then.

Posted by Sergio Schvezov on May 26, 2008 at 04:33 AM PDT #

call me stranger- I lost your number.

Posted by amber on May 27, 2008 at 01:30 PM PDT #

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