In the past few years, we have witnessed a rash of massive personnel layoffs and the loss of thousands of small business structures in the U.S. and around the world. But at this point, I must admit that I still don’t see an end to our financial crisis. We’re not likely to as long as the price of a barrel of gas continues to rise and inflation threatens our way of life.
For the first time since September 2008, oil prices rose to reach levels of over $ 110 a barrel, due to the continuing tensions in the Arab world and after a good indicator in the United States. On the New York Mercantile Exchange (Nymex), a barrel of light sweet crude for May delivery finished 110.30 dollars, which was up $ 1.47 from the previous day. Libya is the 16th largest global producer of oil in the world. This one nation that has been in unrest for weeks now, was responsible for about 2 percent of world oil production, which is about 1,600,000 barrels per day.
Other major oil producers are also in turmoil. Both Yemen and Bahrain are big oil producers -- but far smaller; Bahrain pumps approximately 45,000 barrels per day; and in Yemen just 260,000.
And according to one gas price expert, Trilby Lundberg, gas prices at the pump could hit five dollars a gallon by Memorial Day. The Lundberg Survey, an independent research marketing group that focuses on the petroleum industry, reported that prices jumped 20 cents during a two week reporting period to a nationwide average of $3.76 a gallon.
Lundberg’s survey, showing gas prices on the increase and the harsh impact prices are having on American households from coast-to-coast, is concerning. Many are worried about how gas prices will influence the economic health of the country. If people pay more at the pump there will be less disposable income for them to share with the national retail community and that has them nervous about sustaining sales that will, in turn, push their earnings and the U.S. economy in a positive direction.
Then there’s the question of future inflation. A weak dollar will affect everything from our exports to how much we, as a population, will be able to spend. A recent report showed grocery prices increasing 6.5 percent in March from early January. In the report, Consumer Growth Partners said the increase in food prices was the “sharpest in a generation.” A 25 percent increase in gas prices this year has joined higher food prices, which pulled $18 billion out of the monthly household spending on discretionary items. If the consumer doesn’t spend, the economy goes nowhere.
On top of all this, claims for unemployment benefits unexpectedly increased above the key 400,000 mark recently. Like I said at the beginning, times are still tough and because of a number of issues that are not being resolved, the current situation is likely to remain so for quite a long time. Even though the government announced a few years back that the recession officially ended, it’s evident that millions of people remain out of work and that’s a reality for them and their families. In order to fix the problem, people must directly reconnect themselves to the economy but as long as they continue to lose their homes and are unable to find suitable employment, the possibility of that happening is nearly impossible. Not because they don’t want to, but because they just don’t have the disposable income to do so.