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Will Shock At The Pump Force You To Cut Other Expenses?

With the price of a gallon of gasoline up nearly 30 cents from a month ago, the pain at the pump is once again becoming a major issue for everyone.  As crazy as it seems to us to pay $3.55/gallon for gasoline, how much crazier is it to pay almost $4/gallon for diesel?  Diesel is gasoline’s much-less refined cousin and, if not for the transportation industry (freight trains and big rigs), there’d be very little use for it and it would thus just be a waste product.  The auto industry has to be a bit concerned about the long-term effects of these prices.  They’d be foolish not to.  Although the truck market has been good, especially in Texas and Oklahoma, it doesn’t take a mathematician to figure out what the average person must do.

As long as fuel prices, especially diesel, remain high (and expected to climb), it’s going to be tough to see strong growth in the economy.  Diesel prices should have you concerned the most.  It is the fuel that literally drives America.  Everything you eat, wear or utilize on a day-to-day basis was shipped to you first on a train using diesel, then on a semi using diesel.  Those fuel costs get passed on to you and I in the form of higher prices for products.  That’s economics 101.  And the sacrifices, like most other things, run downhill and eventually spill over everyone.  A memo leaked from retail mega-giant Wal-Mart last week doesn’t seem to bode well for the retail sector.  Wal-Mart, thanks in large part to their ability to buy far more product at cheaper prices than most competitors could even dream of, has long appeared to be on a road of infinite growth.  Apparently there are major cracks even in the Walton kingdom.  And if Wal-Mart is hurting, it’s a safe bet their competitors are also seeing some slumps at the registers.

And for those of us on the hunt for a new auto purchase, the price of the fuel most certainly plays a role.  But what about those who cannot simply opt for a Honda Civic over a Ford F-250?  If you gotta have it, you gotta have it.  Work must go on. And last I checked, it’s not advisable to tow a trailer load of building materials or cattle behind a Civic.  But for many working folks, it really does come down to a drastic choice.  Do I really need the 1/2 ton truck or the minivan?  Could I get by with the Accord or the Focus and save huge $$$ on fuel over the course of a year?  Many of you will give up the comfort of a more accommodating large vehicle for a Prius.  How sad that we’ve come to THAT.  Personally  I’ll ride a mule to town before I’ll drive one of those.

But regardless of what you have or what you may be planning on buying, you still have to get from point A to point B.  What will do without to continue to be able to drive?  After all, what’s your alternative in the Wichita Falls metro area?  Take a train from Bowie to Wichita Falls to work every day?  Not happening.  Catch the bus at 5am to make it to your job across town by 6am?  Not likely.  Call a cab every day?  I don’t think so.  Our cars and trucks are absolutely essential here in North Texas and Southern Oklahoma.  So we really don’t have an alternative.  We have to keep fueling them up.  So as painful as it will be, most folks will simply cut back (and have already) in some other area of their life to offset the expense.  And that effect does have a negative impact on the economy as a whole.  What goes up must come down.  Ask anyone who suffered the last couple of oil crashes and they’ll tell you, the fall is scary.  The impact can be painful.  But this current market makes absolutely no sense.  Supply is high, demand is flat, at best.  Something’s got to give if we ever want to see the economy as a whole truly booming again.

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