Mar 10 2011
The Crashing of a Wave
And so I’m driving less again. Gas prices having topped $3.50, I was thinking about that trip to Trader Joe’s and BJ’s in Hyannis. My car gets about 25 miles to the gallon, and the roundtrip for groceries is just under 50 miles. That’s $7 every week.
This summer the same calculation was $5 for the same. So we’re paying an extra two bucks for our food.
When you look at the price for comparable quality and variety, it still works out. Two dollars for a half-gallon of orange juice from Trader Joe’s versus $3 at Stop & Shop or Shaw’s. Then there’s the whole milk yogurt, which is cheaper than the low-fat whatever-it-is nearby, or any of our family’s other staples.
Still worth the drive, for sure. But that’s $2 dollars that could have been doing something else.
So I am beginning to wonder about stagflation.
The crash of the fall of 2008 was preceded by the most devastating rise in gas prices, and I believe played a big part in accelerating the decline.
Consumers, already being affected by a slowing economy, were hit by a non-negotiable cost increase: the price of driving to work and school.
Combined with the lack of fuelefficient models out there, and the lack of sensible planning by spreading residences in one area and services and employment in others – with little if any public transportation — meant that people were tied to their automobiles. Price of gas goes up quickly equals disposable income flows out the door.
And if you were already tightly budgeted, perhaps part of your mortgage payment, too.
This is part of what I found so aggravating about the argument put forth at the time — that Americans were just scared to spend. If they had any money left to spend, I think they were smart not to spend it unnecessarily. If one of your weekly fixed costs doubles in price, you’re smart to readjust your household budget with an eye towards anything else unexpected. A financial planner would counsel similarly.
Certainly this is an analogy put forward by fiscal conservatives these days towards government spending. Well, it works the other way, too.
That this sudden fiscal prudence in consumer behavior may have hastened the collapse of the economy is not the fault of those consumers. They were behaving rationally given the uncertainty of the times.
Now we’re faced with another steep rise. Or, rather, this is a resumption of the rise that we were feeling three years ago. Beijing drivers alone are putting 1,000 extra cars on the road every day. India’s economy and that of South America are booming, meaning their people want the same conveniences we take for granted. More protein in their diet, employment beyond the farm, and a car for personal mobility. Every drop of oil produced in this country goes on the world market, and increasingly the rest of the world is outbidding us.
Again, this is also completely rational behavior. Just like when an area becomes popular, and real estate shoots up in price. But like land, oil is a finite resource – also finite in its ability to be produced, finite in its ability to be distributed. It is a delicate balance as it is. To screw up the equilibrium, all you need do is have something unexpected happen.
In this case, democratic change. Uncertainty wears many faces.
The upheaval in Libya is not the sole source for the rise in global oil prices. For sure, the North African nation produces only 5 percent of the world’s oil, with none of it going to the United States. Although, as pointed out previously, it goes into the global market and thus its withdrawal affects the total supply everywhere.
But Libya was the wake-up call to oil traders that something was going on in the Arab world. Tunisia, which started it all, doesn’t even produce enough oil to meet domestic demand. Egypt’s production is falling, and will soon match its people’s consumption, too.
It was only when things moved to tiny Bahrain, right next to Saudi Arabia’s oil fields, that markets truly woke up. Meanwhile, Libya began its own descent into violence. We paid more attention there because the man in charge in Tripoli is someone we know to be worthy of disdain, and colorfully crazy.
To be sure, the longer the conflict in Libya goes on, the longer the level of uncertainty in that sector of the market. But anything happening on the Saudi Arabian peninsula that threatens the existing governments will affect the price we pay to fuel our cars and heat our homes.
Meanwhile, signs point to a slow economic recovery in the United States. But this jolt to people’s wallets will have an effect. Disposable income will drop at a time retailers had been hoping for increased consumer spending. This will then be followed by increases in transportation costs, which will drive inflation.
If the rise in energy costs continues at the pace it has been, with $4 gas by mid April, we could see the economy not just stall, but roll backwards just as a next wave of foreclosures hits the real estate market. That’s like getting up on a wave just as it reveals the reef it is about to crash on. Afterward we could be floating crippled in the water for some time.
That’s a tough outlook, and just as I hope that events come to a speedy and favorable conclusion for the people of Libya, I hope I am wrong about this spring’s economy.
In the mean time, the only rational thing to do is cut my weekly grocery fuel costs in half – by only going every other week and buying twice as much.
Read this and other columns online at The Cape Cod Chronicle.
If that happened we’d surpass our goal easily. Even $10 by every fan would put us within striking distance.
On Christmas Day, two presents had been left unopened until 1 p.m. Sofie brought it out for all her extended family to see. She already had quite a haul. Skates from Santa. A Zhu-Zhu pet from her grandmother. A bracelet from her cousin. And lots of clothes.
In a musical coup, the Gumshoe Historians at 
The series at the centerpiece of WGBH’s History page,Hit And Run History is profiling characters in the story of the Columbia Expedition – the first American voyage Voice Pop & Jazz poll, and received four stars from Rolling Stone. As proof around the world. Leaving post-Revolutionary War Boston in 1787, this risky private trading venture was financed and crewed by former privateers, slavers, refugees and POW’s. Buckley and his crew have been taking audiences on the road to tell their stories in a hip, approachable fashion.
Local music has been a key element to the series’ success. Boston’s 
One is there must be an opportunity for the public in the granting community to access the project. This is not to commission a painting that will then hang on the wall of someone’s private library. The other part is, naturally, that the money is to cultivate the grassroots. It is to nurture and encourage people within their community to pursue their talents.
With our second episode, we were able to fulfill the promise of the first, take that seed money and actually follow Kendrick across the Atlantic to Cape Verde. And using that same Yankee ingenuity, when adversity struck in the form of an epidemic of dengue fever there, we were able to turn the situation around by bringing an aid worker with several boxes of relief supplies to a hospital there. In so doing, we added a new element of journalism when our editor Alex Schwantner shot, edited and uploaded a video of our visit to the overcrowded hospital. Not only were we making a good film, we were doing good. That just would not have happened without that grant money to start us off.
