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allan5oh

High fuel costs

Or

Economic slowdown caused by the housing market

Let's put some numbers to this. It costs more to haul a load because of increased fuel costs. 20-30 CPM more.

1000 miles that's $200-$300 more. Now the shipper pays for this, with the cost passed on to the consumer.

Now how much is this load worth? I've hauled a few cereal loads, and I think they're worth around 20k. This means the overall cost of the product has gone up 1%. Big deal. This does not cause economic slowdown.

You have to really put it into perspective, how much has increased transport/fuel costs actually affected product cost? I keep hearing on the radio about how bread has gone up 50% or more, and it must be because of diesel cost. Yet most bread is delivered locally, very little fuel cost. I keep hearing stuff like this over and over again. It just doesn't make sense.

So basically what I'm saying is the American public is the one to blame for our economic problems, not energy companies. Greedy people over-leveraging and treating their houses as an "investment" and not a domicile.

merrick4 · Joined: 08 Nov 2006 Posts: 865

Well I'm no economist, but I don't think people are blaming fuel for the increase of the cost of bread.

Bread is going up, if it is, I don't know I just buy it, I don't look how much it cost, due to the whole thing going on with commodities.

Someone on here will explain it better than me, but something to do with people in emerging markets having more money to buy better quality foods like beef and chicken. Of course this increases the demand for grains (to feed the chickens etc), thus higher demand for that stuff equals higher prices.

Further, in this county people stopped growing certain things in order to plant more corn to try and capitalize on the ethanol craze.

Like I said though someone will be able to explain this better than me, I just picked this up listening to the news.

allan5oh · Posted: Mon Apr 07, 2008 10:26 pm Post subject:

Yup merrick you're definitely right. The price of grain has gone way up.

The opinions are what I've heard on nemo and bozo's show. Bozo keeps talking about how America is in a depression. America isn't in a recession yet. A recession is defined as two consecutive quarters of no economic growth. There hasn't been one yet, but there are indicators that this last quarter(1st 08) might have been a stagnant quarter. That means this 2nd quarter we're just entering would have to be stagnant as well for there to be a real recession.

The bread was just an example, many people are pointing to other products going up blaming transportation costs. Basically in a roundabout way blaming energy companies.

flood · Joined: 16 Jan 2007 Posts: 549 Location: tennesse

allan5oh wrote: High fuel costs

Or

Economic slowdown caused by the housing market

Let's put some numbers to this. It costs more to haul a load because of increased fuel costs. 20-30 CPM more.

1000 miles that's $200-$300 more. Now the shipper pays for this, with the cost passed on to the consumer.

Now how much is this load worth? I've hauled a few cereal loads, and I think they're worth around 20k. This means the overall cost of the product has gone up 1%. Big deal. This does not cause economic slowdown.

You have to really put it into perspective, how much has increased transport/fuel costs actually affected product cost?
and it took what number of trucks to get that cereal to the store

allan5oh · Posted: Mon Apr 07, 2008 11:01 pm Post subject:

My point is overall higher fuel costs really don't cause a huge jump in food prices, or other commodities. Energy companies are not to blame for the current economic condition, and it seems a lot of people are doing exactly that.

no_worries · Joined: 18 Apr 2006 Posts: 834

Fuel is just one part of the price increases we're seeing. The entire commodities complex has seen significant inflation over the past few years due to increased demand and a falling dollar. However, the increase in fuel accounts for more than just the cost of the truck that takes the cereal to the store. At each step along the way you'll have fuel as a factor. The farm, the packaging, the processing, etc. But you're right, fuel is not the largest component in the price increases of most things lately.

As far as a recession, if you go by the two quarters rule (which is only one of several) you might already be out of a recession before you even realized you were in one. Personally, I think we're in one now, but I won't have a long wait to be proven wrong :lol: I think that we actually entered negative growth in December, but the first quarter is good enough.

As for the American public and its greed...taken a look at Canadian home prices lately? Look out when the commodities bubble starts to deflate. I think you guys are going to be right behind us :wink:

Red Clay Rambler · Joined: 30 Oct 2006 Posts: 241 Location: Tennessee

I have driven for a distributor of bakery ingredients for the past 17 years, delivering mostly flour and sugar. A bag of flour that cost 9.00 two years ago now is costing 25.00-30.00. I run a peddle route and I average 2000 miles per week making an average of 30 stops per week, day cab and 48 ft refer. Most outbound loads gross 75-80,000. Quite a bit of diesel used in that.

got mud? · Joined: 27 May 2006 Posts: 243

allan5oh wrote: High fuel costs

Or

Economic slowdown caused by the housing market

Let's put some numbers to this. It costs more to haul a load because of increased fuel costs. 20-30 CPM more.

1000 miles that's $200-$300 more. Now the shipper pays for this, with the cost passed on to the consumer.

Now how much is this load worth? I've hauled a few cereal loads, and I think they're worth around 20k. This means the overall cost of the product has gone up 1%. Big deal. This does not cause economic slowdown.

You have to really put it into perspective, how much has increased transport/fuel costs actually affected product cost? I keep hearing on the radio about how bread has gone up 50% or more, and it must be because of diesel cost. Yet most bread is delivered locally, very little fuel cost. I keep hearing stuff like this over and over again. It just doesn't make sense.

So basically what I'm saying is the American public is the one to blame for our economic problems, not energy companies. Greedy people over-leveraging and treating their houses as an "investment" and not a domicile.

the problem with your numbers are you only accounting for one step in the process. the manufacture is paying that 1% (using your number) for the raw goods. so when they actually ship the product they are passing a 2% increase to the seller or retailer. the retailer also has fuel costs involved with distributing the product to all the stores so that adds another 1% so by the time the product hits the stores it is 3% higher than a year ago. now tack on the consumers 10% increase in gas to purchase that product and you can quickly see why many Americans are struggling.

allan5oh · Posted: Tue Apr 08, 2008 7:49 am Post subject:

got mud.. how much does the average American spend on gasoline in a year?

What I'm saying is the mortgage crisis has affected us a lot more then the price of oil. The economy was doing just fine the first time gasoline hit $3 a gallon. Now it's $3.30 and the economy is drastically different. You cannot blame a 10% increase in the cost of gas for the economy slowing. That's just ridiculous. I spend a mere $500 a year on gas. Spending an extra $50 a year doesn't even begin to affect me. But if freight suddenly slowed down, that would really affect me.

no_worries, Canadian home prices are still gaining speed. You have to realize that Canadians in general are much more modest then Americans. We do not treat our homes as investments, don't do ARM's anywhere near as much, don't take teaser rates, and don't over-leverage ourselves. My local market is expected to get about an 8% gain this year. One of the reasons our housing market is much more stable is because we cannot write off the interest on the mortgage. Personally I think the US government should get rid of that.

countryhorseman · Posted: Tue Apr 08, 2008 8:09 am Post subject:

Although, the higher cost of fuel (energy) can be the signal most important cause of the higher price of goods.

Without fuel, used to create the energy, used to harvest, transport, manufacture and again, deliver the goods, nothing does anything or goes anywhere!

Housing Market crash - created mostly by the greed of some bright crook in the Loan Industry, that came up with the ARM is also a good one! But, those folks that did not look deep enough into the implications of the ARM's were again victims of Budget deficits caused by higher fuel/energy that increases the price of goods needed to survive!

The falling dollar - the fed keeps printing money with no backing (except billions borrowed from China) and pumping into the slowing/failing economy...

Ughh, one nasty circle of which there is no end in site! We are increasing the size of our home garden, purchased more chickens and doing much more of our own growing at home, to offset the rising cost of transported goods!

Does anyone remember the day when the average family produced more than they purchased?

allan5oh wrote: My point is overall higher fuel costs really don't cause a huge jump in food prices, or other commodities. Energy companies are not to blame for the current economic condition, and it seems a lot of people are doing exactly that.

countryhorseman

You have good points and I agree with you! But but you only looked at a small portion of the cycle of a loaf of bread. The expenses of the farmer that grows the wheat and other products that go into that loaf, have more than doubled, including fuel, fertilizer, and herbicides to plant, raise and harvest those crops!

Next, transportation of the raw product to processing is nearly double do to high fuel cost, tires, and maintenance of the trucks and trailers.

Next, processing the raw materials into what the bread maker uses has increased. Energy to run the mills, maintenance of equipment (parts cost has more than doubled), cost to transport whatever waste by-products, etc.

Next, we have transportation to the bread maker, again, higher fuel and maintenance cost of the equipment!

The bread makers cost has increased, again, to higher energy cost and maintenance of production equipment, etc!

Then, deliver of the product to the local grocery store, yes, some areas are blessed that this occurs locally and the product is fresher, but many do not have that luxury and the cost on proportionate!

No, the grocery store - higher cost to have the product brought in, energy to run the lights, etc.

Then, the end user - you, me, and every other consumer! It cost a bunch more for use to get in whatever vehicle and make that trip to go to the grocery store to buy that one loaf of bread that started as a seed in a farmers field way back up the line!

Apply this cycle of thought to every single item we as consumers on a daily basis, and the increase is not just pennies as you have stated! It is many, many dollars more! The process of the economy is not simple at all!

Oh, and the wasteful attitude of the majority of the American is either equal too or a close second to the high cost of fuel.

Have a great day, off to the road we go!

allan5oh wrote:

You have to really put it into perspective, how much has increased transport/fuel costs actually affected product cost? I keep hearing on the radio about how bread has gone up 50% or more, and it must be because of diesel cost. Yet most bread is delivered locally, very little fuel cost. I keep hearing stuff like this over and over again. It just doesn't make sense.

allan5oh · Posted: Tue Apr 08, 2008 8:29 am Post subject:

I'd say the erosion of the dollar has a lot more to do with the increased price of flour then oil prices. Oil prices have been high for a few years now, yet flour has tripled in 2 years in some places. There's also an apparent flour shortage.

http://kingscorecord.canadaeast.com/news/article/243319

Her suppliers indicate it could go to $30 per bag by April a 300 per cent increase in price since last summer, when it was under $10 a bag.

There's no way you can tell me that's because of fuel. There's just no way.

Dispatch_This · Joined: 10 Jan 2007 Posts: 133 Location: Barstow, CA.

One good thing- The Farmers that grow crops are making ou quite well with these higher commodity prices, the investment bankers who shuffle paper are getting the screws put to them. There's some poetic justic in that.

ironeagle_2006 · Joined: 25 Mar 2008 Posts: 37

Here is something we do not realize also alot of the fertilizers and pesticides andherbicides are OIL based and in the last 2 years they have Doubled in price also and REV these prices are direct from 10 farmers who buy them by the 1000 gallon lots EACH.

no_worries · Joined: 18 Apr 2006 Posts: 834

Quote: no_worries, Canadian home prices are still gaining speed. You have to realize that Canadians in general are much more modest then Americans. We do not treat our homes as investments, don't do ARM's anywhere near as much, don't take teaser rates, and don't over-leverage ourselves. My local market is expected to get about an 8% gain this year. One of the reasons our housing market is much more stable is because we cannot write off the interest on the mortgage. Personally I think the US government should get rid of that.

You guys are behind us in the economic cycle. If you get hit with the same issues, it won't happen at the same time. Where I live, we started experiencing the housing downturn two years ago. The issues that we started seeing then are just now cropping up in out neighboring state to the north. Plus, your economy is much more levered to commodities than the U.S. That will provide support or as long as the commodities complex stays strong.

As for different attitudes, you could be right. Although I was up in the Okanogan Valley last summer and the housing market there looked awfully familiar. Vancouver is the same way. As for your local market...well, they do say real estate is local. Time will tell.

Quote: The variable rate mortgage, or sometimes referred to as the adjustable rate mortgage (ARM), is one of the most popular mortgage products available in Canada. Almost every bank in Canada is currently offering a variable rate mortgage...

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