Wednesday, March 7, 2012

THE $8 PER GALLON AMERICAN NIGHTMARE

Americans are once again facing challenges of gas inflation.  According to oil and gas market analysts, the unfortunate trend will push prices higher.  Let's take a look at the probable and possible impact of high gasoline prices on America.

First the probable.  Short term, the oil industry analysts, (not the speculators), are predicting $4.00 per gallon gas national average by this summer.  As the national per gallon price stands at $3.63, we are invariably on track to hit that threshold.  In fact, many areas of the country are closer to $5/gallon already.  In 2008, America experienced heightened national averages nearing $4/gallon.  At that time the economy saw a pull back in demand for gas as consumers trimmed their excess driving.  During that period. many businesses dependent on consumers disposable income realized a sizable impact to their revenues.  As we return to the $4 mark, the same trends are returning to America.

Now that we've tested the factual, now let's look at what some aggressive energy analysts are forecasting as the possible.  The situation of a national gas average of $8.00 per gallon.  What thoughts pour through your mind about this impact on your wallet?

Let's explore the nightmare scenario of $8 gasoline in America.  First of all, realize this would be the average.  Some states such as New York, California and Florida could stagger at the shock of $10.00+.  The direct consumer impact would be evident.  Citizens would severely curtail all excessive travel.  Limiting travel solely to work, grocery and home.  Let's peruse what excesses would be eliminated, including but not limited to:  restaurants, nightlife, day trips, vacations, movies, sports events, shopping, salon visits, amusement parks, and more.  Vehicle travel in general would be severely consolidated.

Now, what impact on businesses?  Businesses large and small would see their revenue slashed due to low consumer flow.  Triggering layoffs of waiters, hair stylists, clerks, and many more.  The airlines would be sorely impacted resulting in layoffs and staggering ticket price increases.  Businesses would see massive surcharges and price increases from suppliers due to transportation costs.  The increases would be passed to the consumer.  Making that rare trip to a restaurant, a more startling moment as you view the prices and grab your wallet.

What about the impact on government?  Your local city/county budget would be sorely skewed under this scenario.  Transportation expenses for a fleet of school buses, police cruisers, EMS/fire trucks and more would soar in costs.  Local and state officials would be scrambling to use what reserves were available to cover expenses. Were this hike in gas prices to become the norm, then government budgets would be stripped of flexibility in allocation or capital improvements.  With localities stripping down their budgets, the next step would be increased taxes or even surcharges would be levied on taxpayers.  Other fallout could resort to layoffs of government workers including teachers and more.  

What about the impact of travel to work?  This may be the most vexing of the $8 nightmare.  Picture this scenario, a father of four who travels 90 miles round trip to work each day now spends $100 per week on gas.  He produces an income of $500 per week.  His expenses at home including mortgage, car loan, utilities, healthcare, food for four and more are $400 per week.  Now enter the scenario of $8+/gallon gas.  He would suddenly be spending $200 per week for gas.  All of his disposable income would evaporate.  He would be forced to tap into savings, then racking up credit card debt.  He, nor his wife, would be able to find a second job.  These secondary jobs are being cut by businesses due to low revenue and high transportation costs.  What shall he do?  Literally, he cannot afford to drive to work.  Yet, he must support his family of four. 

There would be societal shifts as well.  America is used to travel and being on the go.  How would our society react?  Sociologists forecast a dramatic increase in gas theft, hoarding and gas related crime.  Remember folks buying gas caps with locks for their vehicles in the late 1970's?

Yes, this would be a nightmare for America.  Are the more bullish analysts correct?  Let's hope not.  However, one must realize how the impact of a large scale military confrontation in the Middle East would accelerate this scenario, dramatically.

Perhaps this exercise can jostle the need for America to unleash the truly untapped resources of our country.  As a fact, America's energy resources for oil, natural gas, etc., are more than all countries of the world, combined.  Economists project that an American era of energy exploration and production would carry our country to a new level of prosperity and self sufficiency.  The likes no nation has ever experienced.  

America, we are literally sitting on a gold mine of energy.  Let's work to move this country to a new found prosperity.  It's all about properly exercising our right to vote and holding our government accountable to the truth.  The truth is, we are a energy rich nation, let's tap it for the sake of our economy and our security.

AMERICAN MAVERICK COMMENTARY DISCLAIMER...

The commentary provided on TheAmericanMaverick.com and "The American Maverick Radio Show" are the remarks on behalf of Maverick Media and personal expression of Flint Engleman. In no way, are these statements on behalf of any other organization or political entity.

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