Yayy! Gasoline went up 10% today! $4.00 a gallon CDN for premium! - PeachParts Mercedes-Benz Forum

blackmercedes · #1 02-05-2003, 06:03 PM

Gas jumped today! Premium gas is well over $0.80 a litre now, with regular getting close to $0.80!

Not too much effect on me, as the C230 is pretty miserly. Not like a Civic or Echo, but still pretty thrifty.

Hopefully, monster SUV's will begin to fill used car lots. Maybe it'll go up again!

Of course, this means that the Bank of Canada will freak out about inflation and jack interest rates sky high, causing everyone with mortgages and car payments to have huge increases in their cost of living. Spending will fall, and the economy will tank, throwing us into a recession. Unemployment will shoot from 7.5% (current) to 14%. Government expenditures will rise thanks to huge increases in unemployment and welfare payments, and revenue will fall thanks to the drop in the number of tax payers and falling business profits. We'll run deficits, and have to make drastic cuts to education and health care to make ends meet.

Don't think so? This is PRECISELY what occured in Canada when energy prices climbed when the Gulf War happened back in 1991. Four long years we sank into recession, and it took six before unemployment finally began to fall. We created a "jobless recovery" that still has not had unemployment fall below 7% in this country.

David Dodge is about to kill our economy, just like John Crow did 12 years ago. Yippeeee.

#2 02-05-2003, 06:11 PM

If the foreign exchange rate is still around what it was in December, that'd be $2.80 US per gallon....

Wow. I'm unhappy when I have to pay over $1.50 a gallon for any one of our thirsty cars (25 mpg highway? Not on this planet!).

I'm sure the general populace would be on the edge of outright revolt if gasoline prices ran around that down here.

-Sam

420SEL · #3 02-05-2003, 07:12 PM

Premium is .88/l in Ontario now and when I was in NewFoundland in September it was .90/l so I don't even want to think about what it would be there now. You guys in Alberta have the cheapest gas in the country. Interesting note in the GTA the cheapest gas ia always in in between Burlington/Oakville because that is where all the Petro Can big wigs live around here. Usually 3-4cents a litre cheaper than either direction from that area.

mikemover · #4 02-05-2003, 07:32 PM

Funny...War always seems to IMPROVE our economy in the long run...maybe you should try it. (I'm kidding...sort of...)

Diesel is $1.39US around here lately...10 or 15 cents up from what it was this time last year.

mike

blackmercedes · #5 02-05-2003, 07:54 PM

Quote:

Originally posted by mikemover
Funny...War always seems to IMPROVE our economy in the long run...maybe you should try it. (I'm kidding...sort of...)

Glad you're kidding, as we fought side by side you in the Gulf War. War can be a benefit to the economy, thanks to war time production and increases in technology thanks to the push to create technological advances in a short time period. Basic research funding tends to ramp up during war, and this has a long term beneficial effect.

However, when short term price increases come about thanks to the possible shortages caused by war (energy, steel, etc.) and are seen as potential increases in inflation by an aggressive Central Bank that use inflation and not the health of the economy as it's target, war means disaster.

Your US Central Bank keep interest rates too high for too long post 1989, and crashed the US into recession, allowing Clinton to capitalize and win the election. In Canada, we kept our rates higher for longer thanks to inflation fears, and we sunk into an even deeper recession than the US. John Crow, our head of the Bank of Canada, later admitted that he goofed big time. However, his replacement was also his protege, and David Dodge recently indicated that huge interest rate hikes are imminent. We're replaying 1990-1991 all over again. No matter what benefits war brings in terms of economic stimulus, 15% mortgages will kill the economy.

My family is not that sensitive to fuel costs, but we're mortgage holders, and a doubling of our mortgage payment would be noticed, and then some. I don't really care that gas is $0.87 a litre, but with most families holding debts like mortgages and car loans, I am afraid of what will happen to the economy with Dodge's recent proclamations of rate hikes to come. The only hope we have is that our Prime Minister is a lame duck, and will be gone in the next year or so. He may not want his legacy to be a severe recession...

#6 02-05-2003, 09:27 PM

Quote:

Originally posted by blackmercedes
Gl

My family is not that sensitive to fuel costs, but we're mortgage holders, and a doubling of our mortgage payment would be noticed, and then some. I don't really care that gas is $0.87 a litre, but with most families holding debts like mortgages and car loans, I am afraid of what will happen to the economy with Dodge's recent proclamations of rate hikes to come. The only hope we have is that our Prime Minister is a lame duck, and will be gone in the next year or so. He may not want his legacy to be a severe recession...

I drive roughly 750 to 1000 miles a week in my Tundra which averages 22 MPG on the highway even if gas prices DOUBLE I will still only spend 100-150 a week more on fuel or about an hours work no biggie. John do have they heard of Fixed Rate Mortgages yet?

The Economy sucked at the beginning of Gulf War I and heading down the economy given the historical events that took place in the last 2 years the economy is doing pretty good. Home sales are still at historical highs unemployment is not too bad considering the weather in the US this winter slowing construction. This “war” won’t take to long and it should be business as usual provided Saddam assumes desert temperature.

blackmercedes · #7 02-05-2003, 09:55 PM

Quote:

Originally posted by rsbiomedical
John do have they heard of Fixed Rate Mortgages yet?

Not in Canada. Five years is a really long fixed term. Most folks are in shorter terms. We can't lock in for the amortization period, and we can't tax-deduct our mortgage interest either.

Also, our credit requirements tend to be stricter for mortgage granting, and minimum downpayments are 25%, making home ownership out of reach for many families. There is a gov't program to assist families with only 5% down, but the insurance premiums for the mortgage are HUGE, and it means you are financing 100% of the purchase price.

Our economy was also on it's way to rock bottom when the war started, but the perceived "inflation" at the beginning of the war caused our Central Bank to keep interest rates going up, and then it really did us in. While the US was pulling out by 1993-94, we were still crashing along on the bottom. It took years for the Bank of Canada to figure out what they had done, and take corrective action. Greenspan was busy cuting US interest rates years before we did in Canada. We kept our up in some vain attempt to prop up the dollar, which didn't matter much to most Canadian families anyway.

Canada will never see parity in it's currency with the US. Most nations will not. The US is the largest consumer market on the planet, and their currency will always be one of the strongest.

Thanks to Greenspan and his continued attempts at keeping your economy afloat through monetary policy, your level of consumer spending has been pretty good considering the instability in the stock market, etc. This has meant that unemployment numbers have fared okay too. Canada can't seem to get ourselves below 8% for more thana few months. We have this preoccupation with sub 2% inflation, and Dodge thinks that 3% inflation means it's time to beat us to death with rate hikes.

We also created a great deal of economic growth on high-tech. (Yes, Yanks, we're not living in igloos!) Well, anyone with any tech stocks doesn't need a reminder of the folly of that. NorTel was once our premier company. Within months it became a penny stock and added tens of thousands to unemployment lines.

Deregualtion of electricity and natural gas markets has caused enormous price increases to consumers for energy. The rise in the price of oil has increased energy costs as well. In oil/gas rich Alberta, this means a boom, but it's a double edged sword for us. When energy prices rise, the province makes more in revenues, but individuals see increased living costs as their heating/electricity/transportation costs rise too, and then to compound matter interest costs jump along with it.

The war will be swift. However, there is nothing to say that the Bank of Canada will not make the same giant blunder it did ten years ago. "History repeats itself." Sometimes with our inept Feeral Government, I wonder if we're living in the movie Groundhog Day.

Ken300D · #8 02-05-2003, 10:27 PM

What money people were able to pull out of the stock market in the US is getting thrown into real estate. I think that is our next "bubble" here. This also happened in Japan before their final collapse into deflation. At one point a just a portion of Tokyo was valued at more than the entire real estate value of the USA.

I know people that spend a huge portion of a double-income family on their mortgage, for a house that's bigger than they need in a desireable neighborhood. If one of the couple lose their jobs, they lose the house. How does a $4000USD/month mortgage sound?

Ken300D

#9 02-05-2003, 10:29 PM

Quote:

Originally posted by blackmercedes
Not in Canada. Five years is a really long fixed term. Most folks are in shorter terms. We can't lock in for the amortization period, and we can't tax-deduct our mortgage interest either.

Also, our credit requirements tend to be stricter for mortgage granting, and minimum downpayments are 25%, making home ownership out of reach for many families. There is a gov't program to assist families with only 5% down, but the insurance premiums for the mortgage are HUGE, and it means you are financing 100% of the purchase price.

Thanks for the good info! I have definitely learned something today. Since you mentioned Nortel the CEO I forgot his name used to CAMP on a beach on a island in the British Virgins where we keep our boat. We used to email and stuff but I think he took a sabbaticalƒº.

#10 02-05-2003, 10:36 PM

Quote:

Originally posted by Ken300D

I know people that spend a huge portion of a double-income family on their mortgage, for a house that's bigger than they need in a desireable neighborhood. If one of the couple lose their jobs, they lose the house. How does a $4000USD/month mortgage sound?

Ken300D

Agreed I financed a small portion of our home and liquidated some goodies to make up for the rest. My basic philosophy is you should have 2 years of home payment reserves in liquid demand accounts. I would not be able to sleep at night with that much debt.

jsmith · #11 02-06-2003, 07:29 AM

heard that venezuelan oil production is up and OPEC is warning about a possible oil glut in the coming months

john, i hope we come out of this recession alive. i am in the metropolitan NY area and the signs are not good. jobs dried up 2 years ago and i am already more than a year on the beach. many thousands of others in the same boat. i was younger and oblivious the last time around. it is said that the current situation is many, many times worse. it has shattered many an american's dreams and aspirations...

need2speed · #12 02-06-2003, 12:15 PM

As I understand it, whatever strength the US market recovered over the past two years has been on the backs of consumer spending...not its "industrial might".

In a world of off-shore labour and McJobs at home, how can this be sustained? Blackmercedes said the US has the largest consumer market in the world...too true. But is consumerism a healthy way to sustain an economy or does it doom us a form of economic slavery.....an endless cycle of earn-spend-earn-spend?

Oh BTW, pass me the Cheetos while I lace up my Nikes for a spin in the Chevy, will ya? Gotta go to the store and get those new wing-things with Velcro(reg. tm)...don't know what I'll use em for but they sure sound neat.

blackmercedes · #13 02-06-2003, 02:15 PM

Dean,

You're right. Both the US and Canada have seen a shift to "agrification" of our economies, mostly through a shift to service industry jobs, with high value manufacturing jobs being exported.

The reason the US economy has not completely imploded is due to some level of consumer confidence and low interest rates which have kept people spending. Though I am one of the first to denounce "consumerism," there is a need for money to flow to keep people employed and the economy healthy. The problem that we are currently experiencing is the concentration of wealth in a smaller and smaller group of people. This will catch up with us in the long run, as the incredible economic prosperity of the last half of the 20th century was built on the spread of wealth among a great number of people, meaning a great number of consumers. The demand for cars, applicances, and other "modern" devices drove our economy to the top of the heap. We had innovation, manufacturing, distribution, marketing, and retail services. Today, many of those functions are farmed out off-shore, and we are fast becoming a nation of retail clerks and consumers.

The side effect of a healthy, "wealthy" middle class is that they tend to have low savings rates compared to rich folks. While this is bad for people selling GIC's, it's generally good for the economy. It also means that we can tolerate a bit more inflation (no fixed financial assets to erode) and keep interest rates low. This keeps government debt servicing costs low, allowing money to be spent on health, education, and infrastructure. Low rates also keep the market for big ticket items in reasonable shape.

The one bad thing that has happened in the last 20 years is the incredible rise in revolving consumer debt that is not asset backed. (Credit cards!) Borrowing money to buy a car is not the best financial decision, as it is a depreciating asset, but it is an asset nonetheless. Buying your house with credit makes perfect sense. However, buying dinner with your Visa card and floting the balance is bad news. Many more folks are using credit cards as an income source. Not good. The reason for the rise in this type of debt is the shrinking of real wages for the bottom 7/10 of income earners. People have coped with the increase in the cost of living by using their cards.

So, where do we go now?

#14 02-06-2003, 03:21 PM

Quote:

Not in Canada. Five years is a really long fixed term. Most folks are in shorter terms. We can't lock in for the amortization period, and we can't tax-deduct our mortgage interest either.

Quote:

Also, our credit requirements tend to be stricter for mortgage granting, and minimum downpayments are 25%, making home ownership out of reach for many families. There is a gov't program to assist families with only 5% down, but the insurance premiums for the mortgage are HUGE, and it means you are financing 100% of the purchase price.

What, may I ask, is the rationale for all of this? This is kind of disconcerting; I think I'd like to live in Canada at some point in time.

-Sam

jsmith · #15 02-06-2003, 03:25 PM

Quote:

Originally posted by blackmercedes
...The one bad thing that has happened in the last 20 years is the incredible rise in revolving consumer debt that is not asset backed. (Credit cards!) Borrowing money to buy a car is not the best financial decision, as it is a depreciating asset, but it is an asset nonetheless. Buying your house with credit makes perfect sense. However, buying dinner with your Visa card and floting the balance is bad news. Many more folks are using credit cards as an income source. Not good. The reason for the rise in this type of debt is the shrinking of real wages for the bottom 7/10 of income earners. People have coped with the increase in the cost of living by using their cards...

on the subject of credit cards does anyone else use their plastic to get airline miles? i don't keep a balance on my visa but use it for everything. it's a good deal but recently i found out that my credit rating got downgraded because my average balances were too high! there was no way for them to detect that i was paying it off each month. i explained what was going on and the only thing they offered me was to allow me to attach my explanation to my records