Thread: System Failure

OK, we're starting to suffer at 125+ /bbl oil...

What are the system limits for another shock rise? If oil jumps to $200/bbl, might this trigger an inflationary spiral?

Originally Posted by Latherty

OK, we're starting to suffer at 125+ /bbl oil...

What are the system limits for another shock rise? If oil jumps to $200/bbl, might this trigger an inflationary spiral?

No! They don't count the cost of Gasoline against inflation. Rather, it is a sign of inflation all by itself since the oil is not worth more, but those who are paying more for it are saying our money is worth less. And it is. Mismanagment of government, essentially anarchy, where business runs the place, governs us, and we have no government for our protection is all ruining our society, and our democracy. We should not try to export democracy when it is in such short supply.

Oil prices do trigger feedback loops in everything else. Thanks to biofuels, many agricultural commodities (corn, wheat, soy) have their prices directly linked to the price of fuel; the more expensive petroleum gets, the more attractive it becomes to raise and sell crops for the purposes of fuel, not food. (Plus, rising cost of staples also affects the cost of meat and eggs produced by using staples as animal feed.)

Then there is the use of (petroleum-based) fertilizers, not to mention the cost of shipping food. And of course, shipping raises the cost of everything. Oh yeah, and all that stuff made out of plastic? Yeah.

Not to mention the direct cost increase that Joe Consumer pays at the gasoline pump to keep the ol' car or SUV running.

The US dollar is *also* weak, which is an added concern for Amercians, but there is a real commodity spiral ongoing right now. (Look at what the price of rice has done over the last year or so, for reference.)