You don’t have to drive 100 miles a day to see how high gas prices have risen. Experts predict that we will continue to see them climb, especially as the summer approaches.
After I have paid more at the pump, I go home to see the news about international struggle and struggle in the major oil-producing countries of the Middle East. And it strikes me: the effect global news has on our portfolios and budgets does not go away. In fact, the rise in oil will directly affect our credit card balances.
Do not believe me? Oil prices are only eight degrees of separation from credit card disaster. Here’s how.
8 degrees of separation
First degree: events in the Middle East create higher oil prices
According to the US Energy Information Administration (EIA), the US relies for 48% on net oil imports on OPEC. Unrest in the Middle East easily explains the 48% rise in oil prices since Labor Day 2010. Dictators have threatened to burn oil fields, rebellions in Bahrain are hampering the Fleet’s ability to protect the oil tankers entering the Strait of Hormuz and abandoned, and OPEC has the capacity to reduce our offer at will – creating shortages that can further increase the price of a barrel of oil.
These factors lead to …
Second degree: higher prices at the pump
With the rise in the cost of oil, gas prices in the US have increased by 42% since Labor Day 2010. The national average cost of a gallon of gas is $ 3.83, and in six states the price has risen to the level of $ 4 . Most experts say that gas prices have still not ended in response to oil prices, so we will see even higher prices at the pump. While gas prices rise with oil costs, our salaries do not rise with gas prices. When we pay more at the pumpEbenezer Scroogeijk, there is a …
Third degree: reduced availability of cash for consumers
Let’s face it: a lot of our lives mostly salary to salary with very little room for savings. And because food and clothing prices are rising without putting an end, we cannot expect our salaries to keep pace with demand. You have probably already saved Ebenezer Scroogeijk on a tight budget. Combine those sacrifices with the uncontrollable unemployment rate and the addition of higher gas prices is just too much for some. People will have less to spend, which means …
Fourth grade: less spending on extras
When a family has to cut back, extras are the first things to do. You probably already have Ebenezer Scroogeijk less on food, extra clothing, films and new electronic devices. You are smart to reduce your expenses, but this means that individuals and companies producing the projects have undergone a major drop in sales. With everyone who maintains a low spending rate, small and large companies are becoming weaker, which amounts to …
Fifth grade: a weaker economy
The expenditures drive our national economy. When money moves, the economy is healthy. When the straps become tighter, the national numbers suffer. That is how our system works: companies offer a product, people buy it and then the company can hire more people, buy more materials and inventory, pay for transport and shipping and spend on services from third parties, such as accountancy firms and marketing agencies. The more money companies have, the longer that list grows.
When consumers spend, the domino effect ripples through the economy and creates jobs and prosperity along the way. But if spending slows down, the economy becomes tense. Jobs are disappearing, products do not sell and the money that used to circulate is now just as silent as the inventory boards of companies. This trend is not good for anyone, and people usually demand that the government do something about it. Washington usually responds with …
Sixth grade: print more money
“In case of doubt, just print more money” seems to be the motto of our government. Whether they print it to broadcast stimulus controls, or print it to create new government programs that circulate more money, creating more money seems an easy short-term solution to a difficult problem. But it is a long-term problem, so when the government comes to this desperate solution, it usually causes …
Seventh grade: inflation
When the money supply increases, inflation is a clear – and almost immediate – result. Manufacturers and retailers cannot keep up with the crowds, so they increase prices. In the meantime, the value of a dollar is declining rapidly. Despite the extra money in everyone’s wallet, consumers ultimately have to pay more for the same products and services because the supply is low. And because income is not rising as fast as inflation, the only relief is to return to …
Eighth degree: credit cards
If food and gas costs make up a large part of your salary, inflation will make things worse. Everything costs more and you have very few options. That is when it is easy to fall into a dangerous trap: charging a living on credit cards. The faster the prices rise, the faster you can use your credit cards to the maximum.
Credit card issues are not the only issues that are a few steps away from oil prices
But it’s a big one, and these eight degrees show that it’s a closer relationship than you might have thought. What happens halfway the world can quickly lead to exorbitant balances on your credit cards.
Can you do something about it? Yes, you will have to be smarter with our money by doing things like growing our own food, buying things second-hand, using extreme coupons and tricks to help reduce gas bills.
Have you seen the effects of higher oil prices on your personal BS finances? What do you do to prevent you putting daily living expenses on your credit cards? What offerings have you made or what tricks have you found to prevent credit card problems, despite rising prices of supplies?