Give Me Oil for my Lamp, Keep Me Burning, Burning, Burning…

Destination Earth cartoon by John Sutherland - 1956

The famous words from a Sunday School song come to mind with an alternative meaning for me these days.  With oil prices surging, the impacts to my daily life are high on my list of things to ponder, and it’s not just about gas for my car.

Our lifestyles revolve around oil and there are a lot more consumer items to be considered beyond fuel for our automobiles.  The Ranken Energy  Corporation website states, “Americans consume petroleum products at a rate of three-and-a-half gallons of oil and more than 250 cubic feet of natural gas per day each!” But, as many of us know, petroleum is not just used for fuel.”  Ranken’s website says that “Petroleum and petroleum by-products are a vital part of our transportation system and our daily lives. Even those who might argue we use bicycles for our personal transportation fail to recognize that parts of the modern bicycle are made from petroleum by-products and fossil fuel energy was likely used to create the frame, wheels, and chain. Click to see a few products made from hydrocarbons. Our modern lives cannot be lived without using products that have been manufactured with fossil fuels (even a toothbrush) and/or were created with energy provided by fossil fuels.”

Ranken Energy Corporation’s list includes things like: aspirin shampoo, wax, toothpaste, crayons, shaving cream, soft contact lenses, fertilizers, anything polyester and nylon, and so much more. Another good list is offered by PBS via a pdf file showing a plethora of products one doesn’t normally think of when contemplating our oil consumption.

So, not only are we seeing prices in corn, cotton, sugar, soy beans, and other food products going up (see many of my earlier posts for details on that), but now many of our other household products.

A February 24th, 2011 New York post article by Paul Tharp titled Crude Crisis Sparks Rapid-fire Price Hikes states, “Consumers should brace for other hikes as they purchase the more than 6,000 daily products derived from petroleum, ranging from gym gear and iPhone cases to fertilizers and lipsticks.”  He goes on to say that “Atlas Corp. has raised the price of roofing and exterior building products by 10 percent until June, when they will raise them another 12 percent. Building products are also squeezed by slow sales due to the housing recession.” So that adds up to a total 22% in rate hikes by summer for those building products!

“Analysts believe gas pumps here are in store for at least a 25-cent-a-gallon jump by the weekend. That's due to the sharp 30-cent-a-gallon spike in the past three weeks in wholesale gasoline, which settled here yesterday at $2.7167 a gallon, the first flat day in more than a week.”

An MSNBC article by John Schoen points out that the turmoil in the East will wreak havoc in our wallet.  He writes, “Every extra dollar consumers and businesses have to spend on oil takes another little bite out of economic growth.”  The article goes on to say, “Oil price hikes also depress economic growth by raising the cost of raw materials made from petroleum — everything from asphalt to plastics. Higher jet fuel prices put pressure on airlines to raise ticket prices. Higher diesel fuel prices drive up the cost of shipping and construction.”

He quotes the Agriculture Department warning: “… that U.S. consumers should brace for rising food costs this year as higher commodity and energy prices make their way to store shelves. Food prices are forecast to rise a sharp 3.5 percent this year — nearly double the overall inflation rate — with most of those increases coming in the second half of the year.”

Well, I’ve seen prices going up already.

And, think about this.  The MSNBC article says “That puts the Fed in a difficult position if the U.S. economic recovery begins to stumble under the weight of higher food and energy prices.”

Brace yourselves.


Read more:

Image: Michelle Meiklejohn /

Rising Prices–Common News These Days


grocerycartMany of my past posts have shared articles on the likelihood of rising prices. I am alarmed at the rapid increase in similar articles and many in our mainstream media sources like our local Seattle Times.

It is perplexing that not only is the economy struggling, but our world has been rocked with major natural disasters that are impacting many commodities that are key to our consumption: sugar, corn, cotton, soy beans, to name just a few. These disasters add to the rising prices and world-wide food shortages.  While I believe we will be able to find our food in ample supply, the costs will go up.  Where it will hurt most are those who live in third world countries where citizens already spend a huge portion of their meager incomes on food.  Rising prices affect them a lot more than they will here in America.

Seattle Times reporter, Amy Martinez writes in an article titled “Rising Prices Coming Back in Fashion”: The cost of a new wardrobe is expected to rise as much as 10 to 20 percent in the coming months as manufacturers and retailers pass along escalating prices of cotton, rubber and other commodities to customers.”  She goes on to say, “Higher prices are expected to be most noticeable in inexpensive clothes and shoes. That's because labor and raw materials account for a big chunk of the price tag — unlike expensive name-brand merchandise in which production costs are a smaller fraction of the final value.”

Another article in Seattle Times reports on rising commodity prices.

And yet another titled “Rising Wholesale Prices spur Inflation Concerns.”

Check out some of my earlier posts to see other articles:

Image: Suat Eman /


IMF Calls for End of Dollar as the World Currency

There have been rumblings for quite some time about shoving the U.S. Dollar out of the way as the world currency.  Having that unique position has meant that the U.S. economy can continue to operate, even with its massive debt load, when other countries economies have faltered and crashed with less severe debt issues.

A , article by Ben Rooney, outlined the International Monetary Fund’s (IMF) proposal in their article “IMF Calls for Dollar Alternative” and state that this new plan “could help stabilize the global financial system.” Ben goes on to say that “The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.”

In an effort to show what the U.S. is trying to do to stabilize the dollar, the article quotes the Fed Chairman “Bernanke also urged lawmakers to come up with a "credible plan" to bring down "unsustainable" federal budget deficits.

"We expect that the outlook for the U.S. fiscal position will weigh heavily on the U.S. dollar in the quarters ahead," said Sutton. In the near-term, however, she said "a strengthening growth profile" could help provide "a temporary period of dollar strength."

In February 9th article in Bloomberg, Carolyn Salas and Scott Lanman quote Mark Gertler, aaprofessor of economics at New York University ““There is this tremendous fiscal problem looming, and Congress has to do something about it.”

I’d like to remind everyone to think back just a few short months at the various countries in the European Union.  When faced with their huge debt crisis and were forced to cut services, the people took to the streets protesting those cuts.  So what is a country to do?  It is a stand off; cuts are required to maintain fiscal health, but the masses riot when they don’t get their handouts.

Other countries went a step further (Hungary and Argentina to name only two) have absconded with its citizens retirement accounts in order to tap into a huge source of funds to right their sinking economic ships.  The people had no choice.  Their retirement money was gone.

It is time to wake-up America.  Our way of life as we know it will not remain the same.  Are you as prepared for that as you can be?

Is There Really an Economic Crisis?



This is an excellent article by Porter Stansberry (click for bio).  I personally believe we have an economic crisis that is about to get worse over the next few years – and not just in the U.S.

Read on:

An Answer to the Most Popular "End of America" Question

By Porter Stansberry with Braden Copeland

Saturday, February 5, 2011

I've been on the radio a few times in the last month.
Producers are contacting us with interview requests because of our new promotional video, "The End of America."

I imagine most DailyWealth readers have seen this video already. You know the core components of our argument: The debts assumed by the Western democracies will overwhelm their economies and lead to the end of our current dollar-denominated, global currency regime. This has profound implications for Americans' standard of living and our empire's role in the world.
Doing these interviews and taking call-in questions from people around the country reminds me of why we made the video: People suffer from a shocking lack of knowledge about the serious financial problems facing our country. For example, the most popular question is: "When will the crisis begin?"

The question assumes we ought to ignore the collapse of the automakers, the complete destruction of America's investment banks, and the receivership of the world's largest mortgage firms (Fannie and Freddie), and the world's biggest insurance company (AIG)…

The question implies nothing unusual has taken place with housing prices… or in the markets for strategic commodities like lithium, copper, oil, coal, and corn – all of which are soaring in the face of the moribund U.S. economy. The question assumes nothing is going on with the value of our dollar, despite silver trading near $30 and gold trading close to $1,500 – up 100% in only two years.
We respond to the popular question with a question of our own: What will have to happen before you'll say we're in a crisis right now?

How high will gas prices have to get before your neighbors notice something is wrong? How high will gold have to get? Or silver? How many banks will have to go under? How high will unemployment have to rise? How many cities will have to go bankrupt? Where's your threshold? How bad will things have to be before you begin to see what's really happening?

In addition to raising these questions, I've compiled a list of seven key facts that might spring people into taking action to protect themselves. They are the factors I believe MUST lead to the end of the global U.S. dollar standard – what we call "The End of America."

1) The price of gold has gone up 10 years in a row. We can't think of another market that's ever risen for 10 consecutive years. This is a historical anomaly, and it means something has gone badly wrong with the world's reserve currency (the U.S. dollar). Markets, if left to find their own equilibrium, will naturally fluctuate. Gold isn't fluctuating. Its steady move up proves something strange is happening to our money.

2) Our government's deficits are out of control. The government's annual deficits now routinely surpass $1 trillion. The first $1 trillion deficit came in 2008 – and the government explained it away as the consequence of the financial crisis. But we racked up another $1 trillion deficit in 2009 and yet another in 2010.
We'll have another in 2011 and so on. Our national debt has doubled since 2005. We've borrowed more money in the last five years than we had in the entire history of our government until then. This isn't sustainable.

3) The government cannot increase tax revenues enough to cover our spending or repay our debts – ever. Our annual deficits have become completely unlinked to taxes. Total federal income taxes and corporate taxes generate $1.1 trillion a year in revenue, and we still ran a $1.3 trillion federal deficit last year. So even if we increased tax revenues by 100%, we would still have fallen $200 million short. This is totally unsustainable.

4) Special-interest groups – particularly government unions – are looting our Treasury. Self-serving special-interest groups have completely hijacked government spending. We now spend $200 billion a year on federal pensions. We're spending another $450 billion on welfare. This spending, combined with our defense spending ($700 billion), exceeds total federal tax revenue and leaves nothing to pay the $200 billion in interest on our debt, nothing to pay for actual government services (like roads), and nothing to pay towards the inevitable Social Security/Medicare shortfall.

Remember… most voters do not pay taxes. It's politically impossible to reform this interest group-based spending. These people are robbing the Treasury. They will cause our currency and eventually our government itself to collapse.

5) We're printing money just like the banana republics we used to mock. To support the government's runaway spending, the Federal Reserve is now continuously buying government debt. This process was commonly called "monetizing the debt" or, more simply, "printing money."
In addition to the inevitable economic consequences of monetizing debt (massive inflation), there's another, even more serious problem: a lack of confidence in the leadership of the Fed. We would support an audit of the Fed. We would support replacing Fed Chairman Ben Bernanke. After all, Bernanke has alternately defended his decision to print massive quantities of new money and denied ever doing it. However, we are certainly aware that as people (rightly) lose confidence in the Fed and in the dollar, there will be serious consequences for our economy.

6) We can't repay our debts. Total debt outstanding in the U.S. currently exceeds $55 trillion. That's $681,165 in debt per U.S. family. There is simply no way to repay (or even maintain) debt of this magnitude using the income of the average American family, which is slightly less than $50,000 per family per year. Interest alone on these debts (based on a 5% rate) would total $34,000 per family every year. Total debt in the U.S. economy is unsustainable and can't be financed without printing vast new sums of money.

7) Shockingly, new debt issuance in the U.S. is soaring, with the lowest-quality debtors borrowing record amounts. Despite all the evidence that the U.S. economy carries far too much debt, both public and private debt issuance soared to new record levels in 2010. Overall, more than $3 trillion in new corporate debt was issued last year – the second record year in a row.
And junk-bond issuance set a new, vastly higher record. In 2010, 509 speculative-grade corporate borrowers sold $287 billion worth of new debt. That compares to the previous record (2009) of $167 billion. Our economy has become so warped by its debt load, it cannot function without ever-larger amounts of debt.

In summary, anyone who carefully looks at these numbers must realize this is not safe and will not last long. That's why I'm telling everyone: Don't ask, "When will the crisis begin?" Instead, ask, "Where can I get the best deal on gold and silver bullion to protect my family's finances?"

Good investing,
Porter Stansberry

P.S. Please carefully think about the facts I list above. Like it or not, these issues are going to affect you and your family in the months and years ahead. Ignoring this problem will not protect you from it.


Image: scottchan /