The Economy...

[John-in-KC]

This may be a blinding flash of the obvious, but no matter what the pundits say, times aren't easy for wage-earners and mortgage payers.

 

I was at Family FOS call bank last night. Working the ScoutNet prospect sheets, I was calling people who had been reliable and decent donors. At least 3 times, I heard "I'm sorry, but I've lost my job, and I have to conserve. This donation is a luxury for me this year."

 

I know good friends in field sales. Their incomes are not what they were... because their clients have stopped buying.

 

What I'm not sure of is if the news folks are driving and hyping the cycle (pushing us towards an economic panic as part of the election cycle) or if the economic cycle is really bad, and we're seeing correct reporting?

 

Your thoughts?

[Lisabob]

Well John, living as I do in MI, I have been watching this story for a couple of years. Michigan has been a leader in the slump you see, and in the last half (quarter?) of 2007 we had the highest unemployment rate in the country. So I have to say that this is not news to anybody around here, and no one is questioning whether it is "really" happening. In fact, assertions to that effect tend to get a shake of the head and one of those "is that guy/gal crazy?" looks. It may be different where you are - actually I hope it is. But no question and no doubt, no matter what political persuasion, people around here are clear that it really has been a hard economic time.

[John-in-KC]

Lisa,

 

Thanks. It's the problem of sorting spin and reality. I see reports of food banks seeing increased draws, ditto food stamps, then I see the folks who went and bought McMansions. More than a few of those folk are on their heads in their equity.

 

Thanks for the sanity check

[Lisabob]

Yeah I really wondered that about those McMansion buyers too, a few years back when things took a down turn here. Especially because a lot of them were mid-level, white collar workers in various offshoots of the auto industry! I just couldn't imagine how they felt secure doing it. Fast forward to now and look at the foreclosure rates and it seems a lot of them really weren't that secure after all.

[SR540Beaver]

John,

 

If you are listening to a talking head on TV or radio, you can count on it being spin for one side or the other and far from reality. I live in Oklahoma and we currently have a low unemployment rate of 2.something. That being said, my company elected to give zip in the way of raises or increases across the board for 2008.......including execs......which is unheard of. The department my wife managed for a decade is being eliminated and she had to take another position on a project that forces her to travel around the country. Once the project is over, there is no assurances of further employment. I spent $84 filling up my tank this week......and gas is cheaper here than other parts of the country. Our CC is raising the question of charging boys for gas money over and above food and camping fees for the first time. I don't care what guys like Hannity and Rush say, things are tough all over!!! It seems that the only inflation proof jobs are being a politician or a pundit.

[GaHillBilly]

You're talking more about the recession and real estate crisis than gas prices, I think. And, in the short term, those are the bigger issues.

 

But long term, I think fuel prices are what will reform US society in rather profound ways.

 

Cheap autos (relatively) and cheap cars drove the 'suburbanization' of the post WWII America. Auto travel replaced public transportation and walking. For over 50 years, we've been building roads without sidewalks and pulling up rails.

 

But all of those trends have depended on cheap gas, and cheap gas is gone. No matter how you look at it, cheap gas (under $5/gal in current dollars) is done for. Current world economic dynamics pretty much guarantee that nothing short of a global depression -- not just a recession -- will reverse the upward trend for fuel costs.

 

We won't lack for fuel: even without biofuels, Canada and the US have absolutely HUGE reserves of oil in oil sands and shale. But, that's expensive oil to retrieve. Biofuels are expensive when not subsidized. New nuclear plants to provide electricity to generate hydrogen to power fuel cells are expensive. And, new oil refineries are expensive.

 

It's hard to say how all this will play out.

 

But, even in the short term, families are going to be less and less willing to drive long ($$$$) distances. It's already affecting competitive swimming and other sports. It will affect Scouting.

 

When it dawns on parents that putting their son in the troop around the corner, instead of the troop across town, could save $500 or more in fuel costs THIS YEAR some of them will push their sons to switch troops. And, when they realize that that same change is likely to save them $750 or even $1000 per year in the next couple of years . . .

 

As I've thought about this, I've reached two conclusions:

 

+ My son's troop needs to recruit locally, VERY locally. Friends of Scouts are not such good candidates any more, if they have to drive across town.

 

+ We need to make sure we've explored all the local camping, hiking and adventure opportunities before we try to make longer trips. At current gas prices, the troop's annual 800 mile round trip to spend the weekend on the Yorktown had far less takers than usual. It will be interesting to see whether they are even able put together a trip at all when prices reach $6 or $8 per gallon next year.

 

GaHillBilly

 

 

 

[talen333]

Drill off the coast of Florida, Drill off California, Build refineries, Build nuclear plants, Stop being bent over by people who would like us dead if they didn't like our money so much. I for one would be happy to drill a polar bears butt if oil would come out so you can guess where else I think we should be drilling.

[Eamonn]

Not sure if it holds true in other parts of the country?

But one thing that is really becoming my newest pet peeve is the way our local news is reporting "Pain at the pump".

It is treated like a big joke.

 

I don't spend a lot of money on gas (petrol). My round-trip drive to work is only about 26 miles. Since gas has got so expensive I have been driving our smaller cars, a tank of gas lasts about two weeks.

In fact, the other day when I took the Ford Explorer to the garden center, I worked out that I hadn't filled that tank since last January!!

I was really shocked a month or so back when I received my quarterly investment reports and seen that I had lost more in a quarter than I was going to earn this year!!

I called my investment Advisor. He wasn't much help. Sure I know that I'm "In for the long haul" and no I never have in a million years gone with the thinking "It's on on paper!"

One reason I didn't buy a new car this year was because I thought I'd wait and see what the alternative might be.

I have read about diesel cars in the UK that are getting somewhere between 50 -73 miles to the gallon. Sadly they don't as yet meet the California rules on emission controls.

My big fear is what the cost of heating oil will be this winter? A friend of mine just paid $4.29 a gal. I use a little over a thousand gals over the winter.

I have people who rent homes from me, who are late with their rent. One single parent has had her water and electricity cut off. Things are tough.

Fear is a big part of it all.

But food prices are increasing the pain at the pump is real.

I'm looking at ways to not spend as much on fuel and heating, but in order to do so I have to fork over a lot of my hard earned cash and I'm not always sure if the return is worth while.

I know that I'm not as "Green" as I should be. Still I'm making up for it by becoming even more frugal (OJ calls it cheap!!) than I ever have been.

I can and do see why some people are not donating to things that they have donated to in the past.

But I also see that sales of cell phones and video games are on the increase. I think in part because young people don't seem to know the value of a dollar. Or maybe? I'm just getting old?

Ea.

[scoutldr]

Yes, you're getting old, Ea. So are we all. It's costing me about $10 a day just to drive to work and back, with a 2005 6 cyl Explorer. On the highway I get about 22 mpg, according to the trip computer, and about 17 mpg overall. But it's paid for. I thought about buying a little Econobox that gets 30 mpg, but then I think about the $300 car payment and higher personal property tax, so unless I want to make a political statement, it doesn't make sense. On the news tonight they announced that Dow Chemical was increasing the price of its products by 20% across the board. To me that was alarming...just about everything we touch has a Dow Chemical product somewhere in its pedigree. Personally I think gas prices will continue to increase until we are paying what the Europeans are paying ... roughly twice what we are currently paying. A year from now, we will wish for $4 gas to come back.

 

Way back in college (1974), I took Economics 201 as an elective. One of the best courses I ever took. WHat I remember is that 4.5% unemployment is considered "full employment" because there is always a certain number of people "between jobs" for one reason or another. I also learned about inflation ("too much money chasing too few goods") and supply and demand. When I get on the Interstate, and the Suburbans, Tahoes, and jacked up Ford F250 Crew Cab 4x4 passes me doing 75 mph, that's economics in action...demand remains high while supply remains static...therefore cost goes up. It's all in the textbooks and it's not rocket science. The days of cheap gas, 20% stock market returns (historical average is 10-12%), defined pension plans, and secure employment are over. Be Prepared. It will get a lot worse, and may not get better in our lifetimes. Not to mention Global Warming....sheesh. I think I'll go shoot myself.

[Tokala]

Since 1961, my family has been in the tool & die/plastic injection molding business. I'm the 3rd generation. The business has always been ccylic and oddly runs nearly opposite of the majority of the economy. It tends to start downturns sooner and recover earlier. Back in the 80's the industry was concerned about the business going to Portugal, in the 90's it was Mexico, and now it's China. Locally there were 30-40 small, private shops that employed 10-20 guys at wages around $18-20/hour. Now there's probably no more than 10 shops and each may have 2-3 guys at lower wages.

 

I have gone through periods of 3-4 months without landing any jobs and thusly no invoicing. If I wasn't smart enough to save when times were better, I'd be out of business years ago.

 

I've called all the shops locally in the last couple of weeks looking to see if they have work quoted that I can design. None, zip, nada. I doubt that when I return from Arrow Corps 5 that I will have business and that this will be the year I shut things down and look for a new career.

 

As for the price of gas and drilling....they can drill all they want. It won't decrease the demand or the price of oil. Americans are going to have to learn to conserve and not be spend thrifts before they just dump more oil on the market.

 

All of this does cause me to wonder how much I will be able to contribute to Scouting. My council is very small, about 10-15 miles wide x 50 miles long. It's 14 miles round trip to my troop meeting. I can't imagine someone involved in a council where they must drive long distances to be involved with any function. I have already pondered a transfer to save the commute and I'm watchful of the other activities that I volunteer for and the cost involved. I have no children, so it's not a major deal for me to withdraw to more local activities.

[Boris Badenov]

In an economy like this...it really makes you look hard at what is a necessity and what is a luxury. My family is a single income family with a stay at home mom and 5 children under 9. Things don't go half as far as they did even 6 years ago. I was paying $0.99 a gallon then for gas. Groceries...? Not entirely sure except I know it was a lot less. My wife has been the CFO (Chief Family Office in charge of finances) also until recently. She said the stress was getting to her trying to make it all work. So I took it over.

 

I will tell you that 1 1/2 lbs of grapes and 4 lbs of apples = $10! Yikes. How do I know that? Well running out for produce and then finding 2 or 3 half eaten apples around the house makes it stick! LOL

 

I will admit that for years I would grab a soda/pop and a snack when I gassed up adding an additional $3 or $4 to the tab. Not so much any more. I recently heard someone complaining about the price of gas. It dawned on me to ask them if the buy sodas when they are running around between appointments or errands and such was the case. So I figure that on a per gallon price, those sodas are costing what...? $8 or $10 a gallon? Just an observation.

 

In taking over the finances, I was surprised that we were spending about $50 a month on Satelite TV. Gone. Do we miss it? Not as much as I thought we would and believe it or not, we get the local channels just fine on the TV. For our favorite programs, many of them are now available on the internet. So is the news and the weather.

 

We do have a Wii. Luxury? I would have to say so, but with 5 kids underr 9...our idea of an extravagent celebration was reduced to that and lunch out while the kids were at school and farmed out for a few hours. [bTW...You know we get the weather and news on the Wii too].

 

Magazines? None. Newspaper? Sundays only...my wife works the coupons.

 

FOS? I was shocked to death when our pack had a FOS and my wife peeped up and said that we should as I was pondering it. In my mind, I have gotten a lot from it and know my boys (I have 3) do and will benefit tremendously from it. It it a luxury? Now I could spin this thread towards the moral bankruptcy that abounds and how great scouting is to combat that, but I won't. From a $ perspective? I think not, but that is my opinion only. If I can cut out some sodas, TV, magazines, impulse buying...the money is there. It's just about choices. Some easy, some not so easy. Believe me...it took me several years to get to the point that I dropped the dish TV but now that it's gone, it's not so bad.

 

Ok, I have rambled on long enough. Thanks for reading (if you are still there).

 

BB

[talen333]

"As for the price of gas and drilling....they can drill all they want. It won't decrease the demand or the price of oil."

If you increase the supply of oil the price would go down, supply is the other side of the supply and demand equation. We have some of the largest if not the largest reserves in the world stuck in the ground. The government needs to get the heck out of the way and allow private business to go get it!

I wonder how our economy would be looking if the federal government would step back and actually allow the country to run the way it was designed to.

 

What would happen if we produced our own oil and learned to take care of ourselves rather than being dependent on countries that really don't like us all that much, except of course for our money and our Army to protect them when they get in trouble.

Gas Prices Around The World

Iran 40 cents

Saudi Arabia 45 cents

Libya 50 cents

Swaziland 54 cents

Qatar 73 cents

Bahrain 81 cents

Russia 88 cents

Egypt 89 cents

Kuwait 90 cents

Seychelles 98 cents

 

 

[Gold Winger]

"What would happen if we produced our own oil and learned to take care of ourselves rather than being dependent on countries that really don't like us all that much, except of course for our money and our Army to protect them when they get in trouble."

 

If we suddenly found a few trillion barrels of oil in Texas, the price wouldn't drop. Exxon and SO would just sell it to the Chineese at $130 a barrel and dance with glee over the pofits.

 

Countries that have cheap gas have state owned oil companies.

[Lisabob]

talen333, what is your source for your gas prices?

 

This isn't the easiest source to dig around in - you have to be willing to get in past your elbows - but I took a look at the International Energy Agency's stats this morning, for April 2008 (latest month available) and for selected OECD countries (that is to say, countries with economies comparable to the US - advanced industrial democracies) here is what they found:

 

Country Price/Gallon (average price in US Dollars)

France 8.184060744

Germany 8.369545932

Italy 8.30897934

Spain 6.673681356

UK 8.078069208

Japan 4.841541948

Canada 4.398648744

US 3.380372916

 

Obviously prices have gone up just since April. But it does kind of put things in a little bit of a different perspective.

 

(In order to get the price/gallon you need to take the "price/liter" given in the original statistics and multiply that by 3.785412, in case anybody cares.) Here's the source data if others want to play around with it. http://www.iea.org/Textbase/stats/surveys/mps.pdf

 

 

I thought some folks might find this interesting too. According to the Energy Information Administration (part of the Dept. of Energy in the US federal govt): "In 2007, about 58% of the petroleum consumed in the U.S. was imported from foreign countries."

 

And for 2007, the most recent year for which data is available, "[t]he top five source countries and their percent share of U.S. total net petroleum imports were:

Canada (18%)

Saudia Arabia (12%)

Venezuela (11%)

Mexico (10%)

Nigeria (9%)"

(Source: http://tonto.eia.doe.gov/ask/crudeoil_faqs.asp#foreign_oil)

 

So let's all blame Canada!

 

[evmori]

If you increase the supply of oil the price would go down, supply is the other side of the supply and demand equation.

 

This would work if gas prices were determined by supply & demand. However, they are determined by NYMEX - New York Mercantile Exchange - the same folks that determine pork belly prices. If an Arab sheik farts, the price goes up! Supply & demand have nothing to do with gas prices.

 

For an excellent site to track gas prices visit http://www.gasbuddy.com/

 

Ed Mori

1 Peter 4:10