The concern with upward trending fuel prices is the flow on effect.
Living in a regional area, public transport seems to be focussed on school kids and shoppers not commuters. So, I'm faced with little choice but hopping in the car to get to work. Every extra dollar I pay for fuel is either a dollar I don't spend elsewhere or an extra TWO dollars I need to earn. With tight budgets in most households, I'm pretty sure I'm not the only one thinking this way.
The flow on effect is that it impacts other non-negotiable areas of the budget, where the same equation of either redirecting dollars or earning extra can be applied. Pretty soon, all the money earned is directed to must haves only (food & shelter), consumer loans go into arrears and the household budget (and economy) springs a leak.
When fuel prices go up it creates a negative feedback loop that doesn't stop until the price goes down again, like after the Global Financial Crisis (GFC) in 2008. These bumps on the graph leave behind a lot of wreckage and lots of people and businesses either wont recover or wont be recovered enough before the next bump completes.
Building resilience and self-reliance into your daily life is the most economically responsible thing you can do.
Fuel prices are the bubble in the level. Our entire economy is based on cheap fuel so when the balance tips toward higher prices - everything tips. Another GFC is not impossible and this time most of the developed world is carrying huge debt from bailing out big business. Where will the next round of bailouts come from? How will they finance them when all credit sources are exhausted?
I don't think you need to be a fatalist/doomsayer/'The end is nigh' type to see the logic in finding a way to soften the impact of another global economic meltdown.
Along with mortgage interest rate rises, fuel price increases are a great motivator for adding another patch or two to your own patchwork economics.
No comments:
Post a Comment