9 June 2008
Right now when most of us think of oil, we immediately think gasoline as we’re being hit by daily rising costs for gas. We are just now being also hit by rising costs in many areas that use petroleum for production. There are many hard goods using raw materials derived from oil, such as computer screens, tires, toiletries, and plastic packaging to name a few. To enlarge the picture a bit the Dow Chemical Company’s petrochemical operations make a wide variety of plastic bottles and packaging, including many containers once made of glass or tin, paint, computer and television screens, mobile phones, light bulbs, cushions, paper, mattresses, car seats, carpets, steering wheels and polyesters are all made with ingredients that Dow and other chemical companies refine from oil and natural gas.
Costs are skyrocketing and many companies are being forced to make unpleasant choices of raising prices, shifting to less costly procedures, cutting workers, perhaps all three. Auto manufacturers are going to have to do something about the big SUV gas guzzlers, as sales have ground to a halt. Schools which provide transportation for students are thinking of dropping school busses and having students use public transportation. Bus fares, taxi fares and delivery rates are going up. The airline industry is raising fares, dropping routes, laying off employees and getting rid of older planes in their fleets. We are seeing the pinch in raising food costs so that more people, who were living on the edge, are starting to use food banks. At this point in time, there seems to be no end in sight for rising oil prices. Dwindling profits for retailers will soon force them pass along higher prices to consumers and then we will see the inflation rate go up.
Some companies with really high profit margins may have to lower their profit anticipation to keep their prices on an even keel. The oil price surges have not passed as quickly into consumer prices as they did in the 70′s but that time may be coming. Our unemployment rate is rising and unless something isn’t done about extending unemployment reimbursements we will see the ranks of homeless grow.
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