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May 26, 2008

How America Will Fall

Filed under: Main — Ryan Jones @ 10:27 pm

If you don’t think we’re headed toward recession right now just wait – it’s going to get a lot worse. There’s 2 very critical economic effects happening right now that will ultimately topple the American economy: Gas and milk prices are rising.

Here’s how it works: If oil hits $200/barrel then it’s selling for $4.75/gallon by itself. That means gas prices will rise to about $7/gallon. At that price, going to work becomes unprofitable for many people. Most notably, truckers. A great deal of truckers are responsible for owning and gassing up their own rigs – and at $7/gallon it actually makes more sense for many to sit at home instead.

As gas rises and truckers cost more the prices of everyday goods goes up as well. Take a look at milk; it’s gone up faster than gas over the last 6 months. Milk prices aren’t just affected by transportation costs, they’re also affected by farming costs.

In our attempt to shift away from gas we’ve created a grain shortage. Less grains mean that animal food goes up which means that milk (and gasp! beer) goes up as well. Think I’m kidding? Bud Light has gone up an average of $0.75/pitcher in the last 6 months across the nation.

If you think that gas companies are gouging now, consider this: In the last 6 months the price of crude oil has gone up 76% – gas has only gone up 15%. Expect prices in the $6 – $7 range by the 4th of July weekend.

Hold on America, we’re in for a really bumpy ride this summer.

On a brighter note though, gas is going for $2.50/gallon right now in Mexico. It’s almost worth it to rent a tanker for a day trip.


  1. On the other hand, maybe it’ll discourage people from drinking that piss-water excuse for beer. 😛

    Comment by Mike — May 28, 2008 @ 5:33 pm

  2. Hey Mike. Agreed. Only time I drink that beer is when somebody buys it for me – but it was easier to find statistics for the more popular beers.

    Comment by Ryan — May 29, 2008 @ 11:34 am

  3. It’s simple economics:

    if gas prices go up to $8/gallon, people will stop driving and using less gas, and the price will go down (less demand and more supply).

    Otherwise, it would be the perfect investment because the price would never go down.

    and $7-$8? I don’t think it will be there by the 4th…prices are hovering between $4.05-$4.15 here in Toledo. By the 4th, we could see $5, but I don’t think so.

    Comment by james — June 4, 2008 @ 8:02 pm

  4. Food prices have come down dramatically over the last 200 years as production efficiency has increased, but as climates change that trend is soon to be reversed. Not to mention the shortage of qualified agriculture graduates as farming suffers from an image problem. (Genetically Modifed food is one way we can keep the price of food low, but that is a whole ‘nother argument.)

    As for gas, well, America still pays less than Australia does.

    Stu/disco/kung fu

    PS. Long time hey HG? I now work in marketing at the University of Melbourne’s department of Land and Food Resources. Can you tell? haha.

    PPS. Sorry if this posts twice

    Comment by stuart/disco/kungfu — June 10, 2008 @ 2:15 am

  5. Hey Stu. Long time no see. How ya been man? Glad you dropped in.

    As for food prices, I haven’t seen them go down anytime soon. Milk seems to be rising at a very very fast rate.

    I’ve actually been learning a lot about Australia recently. A colleague of mine at demoxi is from there, and he’s always talking about it. One of these days I might get out there.

    Understand gas is more expensive there, but so is everything else isn’t it?

    Comment by Ryan — June 10, 2008 @ 11:50 am

  6. Wow, speaking of america failing…. there was a john mccain ad on this page. I guess it’s keyword based on “america fail” eh?

    pretty smart!

    Comment by Ryan — June 10, 2008 @ 11:51 am

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