Summary:
While gas/petrol prices in the United States might be on the way up, in a strange way this is good for the US, depending on your perspective or course.
Strangely it is in the interests of the US Government at this time to keep oil and thus gas/petrol, prices high. These higher prices, in a bizarre way, actually prop up the US$ and reduce the danger of a collapse in the value of the US$.
Beggaring the rest of the world actually helps the US.
Its moving up, so what?
The US looks like it might be on its way to expensive gas (petrol) again. This actually would be a good thing for the United States and the World, but will hurt for a while.
After all and putting it in context, US$3 per gallon is something like 2€ (based on current exchange rates) per gallon based on approximately 3.7 liters to the US gallon (calc), or something like Euros .60 per liter. In France petrol runs at around Euros 1.3 per liter, due mostly to taxes. So, Europeans are spending something like almost US$7 per gallon.
Has this destroyed the European (or French) economy? Well, no. But it has created an entire continent in which average mileage for vehicles is something like double that of the United States, even with people driving shorter distances. Public transport works and is well utilized in almost all European cities, and many towns.
Average tons of CO2 per person are almost half those of the United States, and like the US have stabilized and are falling.
Implications for Business
Cheap gas/petrol leads to wasteful behaviors, and unsustainable business and cultural practices and policies. In the United States in particular, low gas/petrol prices distort primarily the transport and housing sectors, increasing the average distance that product travels by road, and that individuals are willing to drive to accomplish day to day activities. It results in a self feeding cycle in which more roads create more need to drive, concentrating shopping and business activity in separated hubs of activity, thus creating more and longer road journeys, and increasing the number of miles/person.
Implications for Individuals
well, if you are an individual in the US buying gas, price increases mean less you can spend on other goods and services. At the same time, the US Government calculates inflation in such a way as to demonstrate that a new TV with more function than the previous TV, at the same price, is actually a price decrease, and therefore inflation is stable or going down. Right.
Individuals will need to make specific spending choices, and gas/petrol remains near the top, just to get to work, the store, or to pick the children up from school (apparently America has so many pedophiles that all children everywhere are at risk, more than they ever were).
And the "Up Side" (for the US)?
All countries buy oil from a relatively small number of oil exporting countries. The problem is becoming worse as formerly net exporters are now becoming importers (such as Indonesia).
So, OPEC (and all the rest, which actually make up more than OPEC these days) sells oil to any country, rich or poor. And they all pay the same price, rich or poor. And all that money flows into the treasuries of a few countries.Rich countries, and particularly poor countries, send their billions to a small group of countries, who in good times cannot spend the windfall as fast as it arrives. That money needs to be invested somewhere.
Well, in a world of expensive and oil exporter financial surpluses, that money must find "safe" currencies and financial centers. Treasuries in oil exporting countries need to put that money somewhere, in investments that are "safe".
So there's a little problem - they cannot very well invest it in the economies that are being hurt by high oil prices, specifically the mid-tier and developing countries. After all, the money is leaving these countries, increasing instability and reducing the prospects of a safe return on that money.
So they buy treasuries - US Government Treasury Bonds, or shares in US and European (and some Chinese these days) companies. Why? Because these are "safe" places for their money.
Okay, so how is this good for the US?
Simply put, the US is printing (and selling) money at a rate never seen in the US before. There must be buyers of that money, or the US Treasury will be buying (and is) that money from itself. And buyers of that money demand a return on that money in interest, and the implied promise that the value will not fall, at least not faster than the value of any other asset.
The US is printing so much money that in "normal" economies we should expect either the interest the government must pay to increase, or the value of the currency to fall, or both.
Here's where high-prices oil comes to the rescue.
As long as oil prices are high, the oil exporters have very limited options for where to invest the proceeds from their oil sales. They cannot safely re-invest in the countries that are being impoverished - there is simply too much risk. They cannot invest in their own economies fast enough, nor do they want to. So finding safe havens for that money becomes difficult.
But there is the US$ and US Treasuries, the "safest" government backed money in the world.
So the oil money, extracted from the US and the rest of the world, ends up back in US Treasuries. The US money simply makes a round trip, so to speak. The money from the mid-tier and developing economies however, strips those countries of assets and opportunity, simply to have it prop up the US$ and American spending habits.
So in a strange way, high oil prices are "good" for America, and in theory by propping up the value of the US$, good for a few other countries, even if it beggars the already poor, and drives the not-poor into poverty.
While gas/petrol prices in the United States might be on the way up, in a strange way this is good for the US, depending on your perspective or course.
Strangely it is in the interests of the US Government at this time to keep oil and thus gas/petrol, prices high. These higher prices, in a bizarre way, actually prop up the US$ and reduce the danger of a collapse in the value of the US$.
Beggaring the rest of the world actually helps the US.
Its moving up, so what?
The US looks like it might be on its way to expensive gas (petrol) again. This actually would be a good thing for the United States and the World, but will hurt for a while.
After all and putting it in context, US$3 per gallon is something like 2€ (based on current exchange rates) per gallon based on approximately 3.7 liters to the US gallon (calc), or something like Euros .60 per liter. In France petrol runs at around Euros 1.3 per liter, due mostly to taxes. So, Europeans are spending something like almost US$7 per gallon.
Has this destroyed the European (or French) economy? Well, no. But it has created an entire continent in which average mileage for vehicles is something like double that of the United States, even with people driving shorter distances. Public transport works and is well utilized in almost all European cities, and many towns.
Average tons of CO2 per person are almost half those of the United States, and like the US have stabilized and are falling.
Implications for Business
Cheap gas/petrol leads to wasteful behaviors, and unsustainable business and cultural practices and policies. In the United States in particular, low gas/petrol prices distort primarily the transport and housing sectors, increasing the average distance that product travels by road, and that individuals are willing to drive to accomplish day to day activities. It results in a self feeding cycle in which more roads create more need to drive, concentrating shopping and business activity in separated hubs of activity, thus creating more and longer road journeys, and increasing the number of miles/person.
Implications for Individuals
well, if you are an individual in the US buying gas, price increases mean less you can spend on other goods and services. At the same time, the US Government calculates inflation in such a way as to demonstrate that a new TV with more function than the previous TV, at the same price, is actually a price decrease, and therefore inflation is stable or going down. Right.
Individuals will need to make specific spending choices, and gas/petrol remains near the top, just to get to work, the store, or to pick the children up from school (apparently America has so many pedophiles that all children everywhere are at risk, more than they ever were).
And the "Up Side" (for the US)?
All countries buy oil from a relatively small number of oil exporting countries. The problem is becoming worse as formerly net exporters are now becoming importers (such as Indonesia).
So, OPEC (and all the rest, which actually make up more than OPEC these days) sells oil to any country, rich or poor. And they all pay the same price, rich or poor. And all that money flows into the treasuries of a few countries.Rich countries, and particularly poor countries, send their billions to a small group of countries, who in good times cannot spend the windfall as fast as it arrives. That money needs to be invested somewhere.
Well, in a world of expensive and oil exporter financial surpluses, that money must find "safe" currencies and financial centers. Treasuries in oil exporting countries need to put that money somewhere, in investments that are "safe".
So there's a little problem - they cannot very well invest it in the economies that are being hurt by high oil prices, specifically the mid-tier and developing countries. After all, the money is leaving these countries, increasing instability and reducing the prospects of a safe return on that money.
So they buy treasuries - US Government Treasury Bonds, or shares in US and European (and some Chinese these days) companies. Why? Because these are "safe" places for their money.
Okay, so how is this good for the US?
Simply put, the US is printing (and selling) money at a rate never seen in the US before. There must be buyers of that money, or the US Treasury will be buying (and is) that money from itself. And buyers of that money demand a return on that money in interest, and the implied promise that the value will not fall, at least not faster than the value of any other asset.
The US is printing so much money that in "normal" economies we should expect either the interest the government must pay to increase, or the value of the currency to fall, or both.
Here's where high-prices oil comes to the rescue.
As long as oil prices are high, the oil exporters have very limited options for where to invest the proceeds from their oil sales. They cannot safely re-invest in the countries that are being impoverished - there is simply too much risk. They cannot invest in their own economies fast enough, nor do they want to. So finding safe havens for that money becomes difficult.
But there is the US$ and US Treasuries, the "safest" government backed money in the world.
So the oil money, extracted from the US and the rest of the world, ends up back in US Treasuries. The US money simply makes a round trip, so to speak. The money from the mid-tier and developing economies however, strips those countries of assets and opportunity, simply to have it prop up the US$ and American spending habits.
So in a strange way, high oil prices are "good" for America, and in theory by propping up the value of the US$, good for a few other countries, even if it beggars the already poor, and drives the not-poor into poverty.
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