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wow, what a price jump

Old 01-04-2008 | 01:34 PM
  #21  
Nontypical Buck
 
Joined: Aug 2005
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From: New Mexico
Default RE: wow, what a price jump

While oil prices do have an affect across the economy the effect is less than is being portrayed by the talking heads. Basic economics define inflation as a devaluing of the money, not an increase in the prices (that occures as a result of the devaluing). I don't remember if I read it or heard it somewhere but the report stated that the value of the dollar has dropped around 20% per year for the last 2 years or so. That means that it is worth 60% or less compared to just a couple of years ago. With oil priced in dollars, and corrected for the value of a dollar 2 years ago, $100 oil today is the equivalent of $60 oil 2 years ago, roughly. Weshould point the blame atthe Federal Reserve etc. who are printing more money that has no backing and thus dillutes the value of the dollar for most of the current inflation, not the oil companies.

Increased fuel prices do, as do other things, affect the cost of goods and services, no question. But the % of the cost that fuel comprises is not that big of a chunk. For instance a truck that hauls 40,000 of goods 1000 miles in a truck getting 6 mpg at a cost of $2 a gallon results in a per pound fuel cost of .833 cents per pound for that trip. At $4 a gallon it goes to 1.66 cents per pound. If a typical box of ammo weighs 2 pounds, that 1000 mile shipping cost would onlyincreasethe price by 1.66 cents due to the costof fuel. Not the $5 to $10 that have been mentioned. Obviously there are other things that have to be factored in to justify those types of increases.
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