The last American spending spree, the truth behind oil prices

Poor Man Survival

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“At the end of a century that has seen the evils of communism, Nazism and other modern tyrannies, the impulse to centralize power remains amazingly persistent.” — Joseph Sobran

Like Pigs to Slaughter

Most citizens never learn their lessons…even though fuel prices are falling (at least for now] many idiots are already ordering gas hogs to drive…

A few fuel stats…falling prices can be a two-edged sword

The US government wastes/consumes the most fuel with the post office leading the way [we’re excluding military consumption]. The Department of Energy estimates more than a billion gallons of fuel are wasted because of poorly timed lights in cities…despite calls from the Feds, cities have ignored timing lights more efficiently.

• The price of gas has fallen to $2.82 a gallon.  That is lower than at all times in the last 4 years. Remember that for every $0.10 gas prices decline, after you factor in the typical mileage driven for a vehicle, times the number of drivers in the US, that is something like another $36 billion a year that consumers can save or spend on other goods. Update:  Here are a few statistics to help understand how much the US consumer is saving on gas.
• The average vehicle in the US is driven 11,318 miles/year:
• Source: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/13/cars-in-the-u-s-are-more-fuel-efficient-than-ever-heres-how-it-happened/
• The average gas mileage in the US fleet is about 24 miles per gallon:
• There are about 250 million vehicles in the US: http://www.latimes.com/business/autos/la-fi-hy-ihs-automotive-average-age-car-20140609-story.html
• That’s about 9 billion gallons of gas per month total in the US.
• Every 10 cent decline put $900 million dollars a month in consumers’ pockets.

There has only been one other time in history when the price of oil has crashed by more than 40 dollars in less than 6 months.  The last time this happened was during the second half of 2008, and the beginning of that oil price crash preceded the great financial collapse that happened later that year by several months.  Well, now it is happening again, but this time the stakes are even higher.

When the price of oil falls dramatically, that is a sign that economic activity is slowing down.  It can also have a tremendously destabilizing affect on financial markets.  As you will read about below, energy companies now account for approximately 20 percent of the junk bond market.  And a junk bond implosion is usually a signal that a major stock market crash is on the way.  So if you are looking for a “canary in the coal mine”, keep your eye on the performance of energy junk bonds.  If they begin to collapse, that is a sign that all hell is about to break loose on Wall Street.

• It would be difficult to overstate the importance of the shale oil boom to the U.S. economy.  Thanks to this boom, the United States has become the largest oil producer on the entire planet.

Yes, the U.S. now actually produces more oil than either Saudi Arabia or Russia.  This “revolution” has resulted in the creation of  millions of jobs since the last recession, and it has been one of the key factors that has kept the percentage of Americans that are employed fairly stable.

Unfortunately, the shale oil boom is coming to an abrupt end.  As a recent Vox article discussed, OPEC has essentially declared a price war on U.S. shale oil producers…

For all intents and purposes, OPEC is now engaged in a “price war” with the United States. What that means is that it’s very cheap to pump oil out of places like Saudi Arabia and Kuwait. But it’s more expensive to extract oil from shale formations in places like Texas and North Dakota. So as the price of oil keeps falling, some US producers may become unprofitable and go out of business. The result? Oil prices will stabilize and OPEC maintains its market share.

If the price of oil stays at this level or continues falling, we will see a significant number of U.S. shale oil companies go out of business and large numbers of jobs will be lost.  The Saudis know how to play hardball, and they are absolutely ruthless.

Useful Resources [Take a minute & share]

• How to Plan a Funeral that Doesn’t Cost an Arm and a Leg
• FreeCreditReport.com Versus myFICO.com
  • The Fear of Freedom (Seth Godin)
  • How a single mom can create extra income read more here

The last American spending spree…

Remember when Thanksgiving seemed solely about family, food and football? The American holiday now includes the sport of shopping.

Americans are going to spend more than 600 billion dollars this Christmas season, and on Friday we got to see our fellow citizens fight each other like rabid animals over foreign-made flat screen televisions and Barbie dolls.  As disgusting as this behavior is too many of us, there may soon come a time when we will all fondly remember these days.

Most Americans are completely unaware of what is currently happening in the financial world, but right now there are deeply troubling signs that we could be on the verge of another major global financial collapse.  If the next great economic downturn does strike in 2015, that could mean that we may have just witnessed the last great Black Friday celebration of American materialism

Three of the ten largest economies on the planet have already slipped into recession, and the economic nightmare over in Europe just continues to get even worse.  In fact, we just learned that the unemployment rate in Italy has shot above 13 percent for the first time ever recorded.

In addition, it is important to remember that the “real economy” in the United States is in far worse shape than it was just prior to the last financial crash.  Just consider these numbers…

-In the United States today, the number of payday lending locations is greater than the number of McDonald’s and the number of Starbucks.

-One recent survey found that about 22 percent of all Americans have had to turn to a church food panty for assistance.

-This year, almost one out of every five households in the United States celebrated Thanksgiving on food stamps.

-The rate of government dependence in America is at an all-time high and approximately 60 percent of U.S. households get more in transfer payments from the government than they pay in taxes.

-According to a report that was just released by the National Center on Family Homelessness, the number of homeless children in the U.S. has soared to a new all-time record high of 2.5 million.

Source: The Economic Collapse

Yours in freedom,

Bruce ‘the Poor Man’

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