So Why Is Gas So Expensive?

[macsen rufus]

One big problem for the US is that so much of the economic activity of the past 20 years or so has depended upon building suburbia, and living in suburbia has depended on cheap gas. Couple this with the credit crunch and a bank or two a week going belly up and the issue is suddenly a lot more than a few "whining drivers". The whole pattern of settlement and development is not just dependent on oil, it is dependent on cheap oil. Property values are crashing, negative equity abounds, something like half a million homes have been repoed in the last few months. There are people with no homes, banks with empty property they can't sell, and suburban neighbourhoods in terminal decline. It doesn't take many empty, repoed houses in a street to crash property values even further. Which means that it's no longer viable to be a property developer. Huge lay offs in construction, and a large source of national wealth creation is blown. SUVs are losing value as fast as homes, the auto industry (directly or indirectly responsible for about 1/7 of US GDP & jobs) is in a dire state, and commercial property is also set to decline rapidly. Major malls are losing anchor stores. Cheap oil and cheap credit are the two crutches that have propped up the US lifestyle whilst its industry has gone overseas, and consumers have racked up massive personal debt and the govt has pegged up a record-breaking deficit as well. China owns your collective ass, like it or not. I realise this may sound like gloating over your misfortunes, but actually the old adage still holds - "When America sneezes, the whole world catches a cold". A lot of the Western economies are badly contaminanted by the sub-prime mortgage vehicles, and Britain too depends way too much on finance instead of real economic activity (you know, quaint old-fashioned stuff like making things...)

"Whining drivers" are the least of the concerns. Oil prices run through every aspect of our society, from intensive agriculture, which uses nearly 10 calories of fuel for each calorie of food produced, through distribution of all consumer needs. Fuel is just as expensive for the trucks bringing food to the mall as it is for shoppers driving there to buy it, or driving their 3 hour commute to work from the once "affordable" suburbs. So expect spiralling prices at the shops, too, as well as your domestic fuel bills, all at a time when your house is shedding value, your 401(k) evaporates daily as stocks crash, and your job turns out to be dependent on one of those sectors that is really suffering....

Ah, I feel refreshed now I've had my morning dose of doom