Another "Oil Bomb" Set to Go Off in About a Year!

[DemocracyInaction]

Caught a part of a CNN piece this morning where they were interviewing managers of a number of businesses ranging from the Postal Services to movers, etc. They talked about the enormous impact just 1 cent of gas increase has on their bottom lines. However, they said that "so far" they have swallowed this impact and have not passed it along to customers. They said if things don't get better (and they are not going to--this isn't a momentary blip), that they will have to start passing along the costs by this time next year.

We already are experiencing in things like groceries the added on costs BUT those asses who are whistling past the graveyard (like George Will)and saying this is having little impact on our economy, have not figured out that the "pass down" is only in it's infancy right now.

Also, few minutes later, I saw on Bloomberg that places like Applebees are greatly adjusting downward their earnings forecasts. Bloomberg's analysts pointed out that business catering to the "lower echelon" of consumers are already feeling the impact of the oil (i.e., people aren't spending on frills)but that the "high end" so far is still holding on to good forecasts. I think "the higher echelons" are going to be in for a shock within the year. When the peons stop buying, the companies reduce employees or go out of business, and then the "high echelons" end up also without employment or hefty returns on their investments.

In the words of Pat Robertson or Jerry Falwell: Prepare, ye...the end is coming!!! Thanks George.

[brokensymmetry]

1. Good points.

And things aren't going to come down; no, they are going to go up from here. A lot, in my opinion.

[lectrobyte]

2. I have trouble beieving that as tightly run as most businesses are

these days, then can absorb the costs of fuel increases for a year and not pass it along sooner than that.

[DemocracyInaction]

3. lectro--oh, I think that as each day passes,

we are going to find more and more pass it along. But, I'm saying that no one is going to be able to hold out longer than a year without so denting their bottom line that investors back away, etc. And small businesses just can't survive long at all with that impact. (Ironically, a family member who owns a heating oil business is afraid he could fold because of the cost to fill his delivery trucks!). And, of course, this is based on just what it costs today. God knows what gas will cost in 2 or 3 months. I noticed today on Bloomberg (financil news) that they said the whole market is jittery because they don't know WHEN it's going to impact the economy and they stressed it's a WHEN and not an IF. Georgie is going to have to blow up nothing less than a major American city in order to distract from this one.........

[lectrobyte]

9. If there is any bright side to this mess (and I must admit I have

trouble seeing any), we can think back to the phrase "it's the economy, stupid!" and hope a bunch of Republicans get voted out in '06. I know the extra $100/month roughly I'm spending on gas would have gone towards other discretionary-type spending.

[Hugin]

12. Same... Same...

At the moment it has entirely eliminated my discretionary spending.

No biggie as it used to be eaten up with high finance charges...

But, we're entering that dangerous place where "The cost of money"
is going to go up. Way up, as I see it.

This won't hurt those who's income matches the real COL. But,
you see... Fuel is one of the items removed by this administration
in calculating any COLAs from the CPI. Those on a fixed income
are really going to be hurt.

Sorry if this post seems scattered... My mind is still wandering
through the ramifications of the effects of an energy shock to
the economy as a whole.

[lectrobyte]

15. fuel is not part of the CPI calculation? I did not know that. No

wonder I think the economy is wheezing, and the numbers look so good. Let's see, expenses, housing, yeah, that's a biggy, car, with its payment, fuel, taxes, insurance, maintenance etc. is probably number 2.

[Hugin]

18. It's in the small print... ;)

Here's the text linking the CPI to the SSA-COLA.

"Soon after the publication of September CPI data on October 19th, 2004, the Social Security Administration (SSA) announced the annual increase in its benefit payments for the coming year."

http://www.bls.gov/cpi/cpifaq.htm

[Missy Vixen]

17. It's already happening

I own a business that caters to a particular hobby. UPS and FedEx have already notified me that they are adding surcharges to shipping costs from my suppliers. The wholesale items I buy are going through the roof as well due to increased costs to their manufacturers.

I have increased my prices as a result. Unfortunately, my business is not big enough to "eat" the additional costs.

Julie

[endarkenment]

4. Le petit prince

There is a drawing in that wonderful book of a boa constrictor that has swallowed an elephant. At the moment the elephant of energy costs are still 'working their way through the system'.

here: http://theliterarylink.com/prince1.html

2nd and third drawings down.

[Hugin]

8. Nice reference...

"But, it's a hat!"

LOL!

[SammyWinstonJack]

5. My son works for Applebees he's a cook.

The last four days have been very slow at his location which is in a business district by the airport, usually a very busy store. He has come home two hours early everyday, right after the lunch hour.

[niallmac]

6. Don't know about an Oil Bomb. Withering small arms fire right now. nt

[newportdadde]

7. Makes sense, particulary the Applebees part.

The rising cost of fuel DESTROYS disposable income. That nice buffer that most of us hope to have which we use to eat out, go to the movies or save up to purchase a new TV, appliance etc is being destroyed. Add on top of that rising costs for items you need to survive like food and disposable income gets hit again.

It hasn't hit full force yet because many are still buying time by throwing it on plastic or home equity loans. That time will run out.

Simply put, if companies want Americans to continue to purchase products they need to realize that they must increase wages and provide jobs(good jobs with benefits) with wages which can absorb these costs.

[Hugin]

10. I don't understand why the "Tax Cut" crew isn't all over this...

High fuel costs are worse than any tax... Due to the fact
there is no return-on-investment.

It's also interesting the oil companies are reporting record
profits in this time of "National Emergency".

[DemocracyInaction]

13. Prag--don't you understand the "half-wit" mind set??

Remember a line from a Dicken's novel describing a certain character in the book: "he knew the price of everything and the value of nothing"!! Something similar applies here. All these dumbfucks get fixated on a couple bucks off their taxes but cannot see the avalanche of costs that are going to wipe out their wallets that follow the "tax break". They cheer at less state taxes or federal taxes and find out their property taxes have gone through the roof because of the lack of funds coming to their communities from the state or feds. They start being charged garbage pick-up fees that used to be free, etc. And these idiots will listen to Rush and be told that this oil gouging is okay 'cause it's done by compassionate captialism rather than some commies trying to get people into a healthcare system that will reduce the cost of this other rope around people's necks. The problem is is that we have let the base ignorant rule this country and declared war on intelligence.

[Hugin]

19. Can't get my mind around it...

As a wise relative of mine was fond of saying...

"Listening to them is like listening to someone ask for a
glass of ice water from a cannibal's stew pot."

Ah, well...

Thanks for your pertinent words.

:)

[SoCalDem]

11. Dollar`Stores are hurting too..

A manager was interviewed and he said that since their merchandise SELLS for a dollar, the shipping costs of the merchandise is already built into the prices. When delivery charges go up significantly, they can't just arbitrairly raise the prices.. (They actually can, but... Anyone remember WHY Motel 6 was called Motel 6?)...

He said that mostly POOR people shop there, and they are buying less..

Malls will be ghost-towns before long...

[DemocracyInaction]

14. SoCal--Guess What?

We have a dollar store in my community and it is by no means just where the poor shop. Yuppies swamp the place for b-day favors, wrapping paper, cards, etc. If these stores go, even yuppies will feel the pinch. Just dawned on me: doesn't the "lower echelon" stores also include the undisputed God of Creation--Wal-Mart???? And, speaking of God, something I know about having been a practicing, church going Christian for all my 60 years: when the going gets rough, the Christians cut their giving to the Church. What a yuck. The slimebag Christian Right delivers us unto the Bush regime and in the end the preachermen may end up with a big bucket of warm spit in the collection plate instead of the godly sight of green.

[SoCalDem]

16. The manager said that.. I shop there too and I'm not quite poor yet

I like their paper gift bags.. 50cents each..even for the pretty foil ones.. and I buy car wash dish soap there ..and garage paper towels...and the one near us has baskin-Robbins discontinued sugar free candies that are my hubby's FAVES .. When I used to buy them at the grocery, I always paid upwards of $3.50 a bag..Last time i bought them at the dollar store they were TWO for a dollar :)