Economic Toll Mounts From High Oil Prices

Source: NY Times

Oil prices leaped above $135 in overnight trading on Thursday, a new record that underscored the growing pressures that runaway energy prices are placing on some of the biggest names in global industry. By 1:30 p.m.Thursday, oil had fallen back and was trading at $131.30 down $1.87 from Wednesday’s close. But in a week that has seen the oil price rise by $4, the economic consequences of high fuel costs continued to mount.

The Ford Motor Company, the American auto manufacturer, said on Thursday it would cut vehicle production for the rest of this year and fall short of reaching profitability in 2009, a long-held company goal. In a statement, a top Ford executive said rising gasoline prices “are having a tremendous impact on our sales, our manufacturing operations and our profitability.”

Meanwhile, Europe’s biggest airline, Air France-KLM, warned of a profound reshaping of the world airline industry caused by what it called the “explosion” in the price of oil. And American Airlines said on Wednesday that it would slash flights and begin charging passengers to check bags, part of a company effort to cut costs in the face of skyrocketing fuel prices.

Last year, oil futures spent months dancing around the $100 a barrel. But since breaking that mark, the run-up has accelerated: in May alone, oil prices have gained nearly $20 a barrel. So far, May is on track toward the biggest monthly price gain since July 2004.

Read more: http://www.nytimes.com/2008/05/23/business/worldbusiness/23oilweb.html?hp

on my long drive to a doc's office.

In my own part of town they're still full, but that's because when clothing stores close they're taken over by payday loan, rent to own, or dollar stores.

I imagine those kinds of businesses will move to the "nice" part of town and soon.

Most of this demand is confounded by speculation, though, one cannot deny the emerging economies of India and China.

Seems to me that the global economy is headed for a meltdown. If we can't buy goods and services from China and India, how will this effect them? Is their economy robust enough to withstand a collapse in the US?

presidents, on CNN said oil should be $60 MAYBE $70 DOLLARS A BARREL.

Demand is going to keep rising and supplies are not. The speculators know this. IMO

Short term price rises are due to speculation, but i'm afraid the only way this bubble is going to burst is by a global economic meltdown.

"The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought."



http://online.wsj.com/article/SB121139527250011387.html?mod=hps_us_whats_news

(and this group is known for making rather optimistic assessments).

their system is a sure thing, and they are not regulated, they are part of the family mafia that has taken over.. and skims off 30% to $40% of the price of everything essential

:D

Just a very steep dip in the economy that may last a few decades.

There will be no food shortage. Just an undersupply of nutrient materials.

voodoo economics (GHWB's words, not mine) and continued by GHWB and junior culminating in an eightfold increase in the national debt in little more than a quarter of a century and a greatly depreciated dollar. As a result, most baby-boomers face the prospect of the Federal government being unable or unwilling to meet its "entitlement" obligations, i.e., social security and Medicare benefits, and if met, paid in a dollar having only a minor fraction of its previous purchasing power. That there will be a very steep dip in the economy that may last a few decades is therefore a pretty safe bet. But have no fear, while our national security (economy, jobs market, standard of living, purchasing power of the dollar, the environment, and our infrastructure) has been sacrificed to enable us to spend more on the military than the rest of the world combined, we have enough nukes to destroy the world maybe a thousand or more times over. :D

by Memorial Day, or the 4th of July? This has got to be affecting tourism and RV sales. :eyes:

How is this action part of the plan to CUT COSTS?
Charge your customers more, to drive them away?
That'll work.

and have noticed a large drop in vehicle traffic and people out shopping. I went out to eat a couple days ago at a restaraunt during dinner rush and was alone. Sat there for 40 minutes or so and nobody else ever came in. I hate to think of how all the other small local shops are fairing.
Not too mention the state and all the cities with large budget shortfalls. Seems it's going to get a whole lot worse, very quickly, if this all keeps up.

security?

Something tells me, no, we are not.

If you are out driving at night, you will notice far fewer trucks out on the road. It's actually rather quiet on highway I-5. I believe we have something like 50,000 trucks which drive up & down the I-5 corridor from Washington to California.

I hear that trucking companies are going bankrupt left & right from this.

Not sure how many people see in other regions of the country, but they're pretty common here- whereas I've noticed a lot less SUV's on the road.

I cried "Uncle" when gas hit $2.75. Where do all these people work that they can afford to pay $5.00 a gallon and it doesn't bother them? Please tell me, I want to go apply for a job there.

I am buying me a bike.

"You all are gouging the American public, and it needs to stop," declared Representative Steve Cohen

....we are dealing with corporate terrorists and we need to bring our troops home from Iraq and use them to secure us from the corporate oil enemy within....

....we need our troops to 'surge' on wall street and big oil for they are doing more damage to us and our economy than Iraq ever could....we defend ourselves against the ant while the elephant tramples us to death....