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Tuesday, March 8, 2011

Skyrocketing Oil Price and Inflation

Skyrocketing Oil Price and Inflation

For every dollar increase in the price of oil, there is an equivalent increase in the cost of producing nearly everything that we consume.
We have been facing the specter of inflation due to world record spending, deficits, and fiat money creation, but now we also need to factor in the rapidly increasing price of oil into the inflation equation.
The current turmoil in the Middle East has shot up the price of oil to more than $100 a barrel. Some are saying that this could escalate to $140 a barrel. We know how this plays out… the increased costs are nearly always passed on to the consumer with price increases.
It could be a perfect storm brewing while the ingredients mix together to propel prices through the roof while the economy crashes from its current precarious stagnant position.
How do you think Wall Street will respond to the prospect of oil induced price inflation coupled with the existing threat of inflation? Probably not very well…
Hold on to your hats…
Given the gloomy outlook of this possibility, is there a bright side at all?
Yes, there is often a bright side to an apparent doom and gloom scenario. One is, the sooner we recognize the likelihood of price inflation, the sooner we can make decisions that will benefit us. Decisions ranging from where and how to invest your money, to the things that are better off purchased now than later, to becoming better prepared for even tougher times ahead.
Being a bit ahead of the pack is a good thing. Most people don’t commit enough time to dig a little into the news around them, and as a consequence they will be caught highly off-guard should the worst happen.
I recall the time prior to the 2008 stock market crash when most everyone still believed the situation at the time to be ‘normal’. Quite nearly everyone I had spoken with after the crash, had not moved their 401K money to other safer funds. All you need to do is apply a little common sense to what is happening in the world around us, and you will be one step ahead of the pack.
Wouldn’t it be nice to get yourself one of those gasoline tanker trucks and park it in your yard at today’s gas prices before it goes up by 50 percent or more?

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