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Which sector of economy will be hit first ??

Discussions about the economic and financial ramifications of PEAK OIL

Unread postby linlithgowoil » Wed 11 May 2005, 06:29:27

i actually think airlines wont be the first to suffer. they are propped up by the government, unlike other industries.

i think all the superfluous crappy service and luxury industries are already starting to suffer. in the UK, it has been shown that this time last year, people had more disposable income. so, going on the assumption that we have less disposable income now, and that food prices and energy prices are continuing to go up, people just plain won't be able to afford to eat at restaurants as much, buy £2 cups of frothy coffee (which probably cost about 1pence to make and tastes the same as instant nescafe) and have their gym memberships (which they never actually use - its just having a gym membership that matters... b*astards).

i am very much looking forward to the collapse of the service economy in scotland. thats all we bloody do here. call centres, banks, financial services, hotels, bars, all that crap that produces no wealth at all. thing is, once the service economy collapses, what next? there's no heavy industries now, no coal mining, not all that much agriculture. i foresee a lot of emigration from Scotland (there is a lot already).
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Unread postby Ludi » Wed 11 May 2005, 06:46:55

linlithgowoil wrote:i am very much looking forward to the collapse of the service economy in scotland. thats all we bloody do here. call centres, banks, financial services, hotels, bars, all that crap that produces no wealth at all.


Woo, that's a lot of people out of work. I'm not sure why anyone would really "look forward" to it. Sort of like saying "I'm very much looking forward to everyone being destitute."
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Unread postby ohanian » Wed 11 May 2005, 06:58:02


Q: Which sector of the economy will be hit first?

A: The sector of the economy which will be hit first have the following characteristics.

1) Highly competative hence very low margin.

2) Depend on transportation as one of its fix cost.

3) Depends on the main economy booming along.

Thus

The small/compact car manufacturing industry.

The airline industry.

The dairy industry.

The tourism travel industry.
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Unread postby Pops » Wed 11 May 2005, 08:38:16

If I bold all my type does that mean I’m right?

Anyway I’m not sure airlines are the indicator everyone imagines, they were over extended with too many seats and too much competition way back, so oil prices only added to their problems - it didn’t cause them. And the price of oil certainly hasn’t hurt Toyota, which just had its largest quarter ever, IIRC, though GM & Ford made their own bed and will have to lie in it.

But look at it a different way, if filling the tank is done with cash or ATM and goes from say $30 to $50 a pop, does that mean you quit saving for vacation or flying to Aunt Edna’s funeral - or more likely don’t put those trips on the credit card? It seems to me you would cut back on other out of pocket expenses first: maybe a few less movie rentals and pizzas or 1 or 2 less candy-coffees that week. BTW I heard a tidbit the other day that box office receipts were down the last 10 weeks in a row – going to the movies is an out-of-pocket type expenditure.


Or when you go to the grocery with your $200 budget and it’s gone faster than it used to be, do you think, ‘man we won’t be able to fly to England this year’, or do you simply forego a couple of boxes of Twinkies and that pre shredded Arugula salad mix?

Transport costs will rise and in turn the cost of everything will ratchet up but don’t forget that just about everything is transported to you from a long distance except maybe bread, milk and eggs. The transport sectors will slow but they will only slow in tandem with all the companies whose products are deemed “expendable” to the middle classes.

I guess what I’m thinking is there is so much little Stuff that gets purchased which is completely useless that pointing to the things people really look forward too like vacations and new cars doesn’t seem the right direction - at least in the short term. More likely the trend will be an across the board slowing as more and more money is tithed to Exxon and Aramco.


BTW, did someone mention the packaging industry?

“These price increases have hit firms that rely on plastic for packaging. Pepsi bottling group for example reported last month that net income for the first quarter 2005 was $39 million, compared to 2004’s first quarter income of $50 million. This is the first time that quarterly profit has fallen in almost two years.”

Food Production Daily
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One thing I won't miss is those hard plastic packages that take a pair of tin snips to open that protect a $1.98 item!
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Unread postby Leanan » Wed 11 May 2005, 08:52:44

Or when you go to the grocery with your $200 budget and it’s gone faster than it used to be, do you think, ‘man we won’t be able to fly to England this year’, or do you simply forego a couple of boxes of Twinkies and that pre shredded Arugula salad mix?


I think, "Man, we won't be able to fly to England this year." Especially with the exchange rate.

If it was only $30 or $40 more, then, yeah, I'd cut back on other things. (Though I never buy Twinkies or arugula salad mix.) But when the correction comes, it's not going to be $30 or $40. I think prices will double, or more. Meanwhile, the whole flying experience will get less and less pleasant, due to increased security measures, budget-cutting, and increasingly unhappy airline employees. I can very easily see people deciding to skip Aunt Edna's funeral, and just send a nice flower arrangement instead.
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Unread postby smallpoxgirl » Wed 11 May 2005, 09:15:50

Russian_Cowboy wrote:The supply of USED compact cars is FIXED. If everybody opts for buying a used compact car, there are not going to be enough used compacts for everybody. Somebody will have to buy new compact cars. The price of used small cars has already increased significantly from one year ago.


That's not totaly true. Eventually all used cars end up in the crusher. There is some expansibility in the used car market by driving up prices and encouraging people to fix cars that they otherwise would have just thrown away.

Seems to me that the problem with this whole efficient car boom you guys are talking about is that cars have an enormous amount of embodied energy. If the price of gas goes up 50%, the cost of a new car is probably going to go up 50% also. As more people move to the cities, prices of city housing are going to go up. There is not a simple solution to this problem. I think the bottom line is that the standard of living has to drop.
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Unread postby lizzybeth » Wed 11 May 2005, 10:59:55

Don't forget other discretionary spending like:
Restaurants
Music - CDs, Concerts
Clothing (to some extent)
Jewelery
Cosmetics
Home Improvement


I see it already. Everyone at my office is pinched. Except management!
My groceries are WAY up. We are eating balony sandwhiches instead of our usual deli meats. Rib Eye steaks are $9.99 a pound here ON SALE.
They were like $5.99 on sale a few months ago.
I sell Mary Kay cosmetics on the side. All my customers are already cutting back.
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I think it all depends which part of the world you are in.

Unread postby Janick » Wed 11 May 2005, 12:28:14

In North America, consumers will start spending less. They'll cut out anything that is a luxury and they will hang on longer to some things instead of upgrading (example: computers, cars). Outings (restaurants, movies) will be reduced.

The end-consumer is ultimately what drives a big part of the economy. Anywhere the end consumer will decrease spending, that is what will hit the economy first.

Up here, food hasn't gone up that much. Besides gas prices, I don't think many people here have contracted their spending. The only visible part of the economy that is slightly down is real estate. But that's just because the prices have become ridiculously high.
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Unread postby cube » Wed 11 May 2005, 14:09:34

smallpoxgirl wrote:...... There is not a simple solution to this problem. I think the bottom line is that the standard of living has to drop.
I don't see to many people arguing with that idea. Instead there seems to be a disagreement as to:

how much the standard of living is going to drop?
what's going to happen?
how will people react?
who's going to get hit the hardest?
ect....

Another problem area I see is the smog test laws. I live in California and we have some of the toughest smog standards in the nation if not the world. If your car doesn't pass smog then you have 3 options:
1) buy a new car
2) give up on driving
3) pay to get your car fixed to meet regulations

Once PO hits money is going to be real tight. The last thing a person wants to do is buy a new car or pay some greasy mechanic a grand when they have less money to go around. I think a lot of people who don't pass smog are just going to say, "To hell with the government...I'm going to drive my car anyways even if I can't get it registered." :P
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Unread postby smallpoxgirl » Wed 11 May 2005, 15:01:15

cube wrote:
smallpoxgirl wrote:I think the bottom line is that the standard of living has to drop.
I don't see to many people arguing with that idea.


There are some. Most notably Lorenzo. though not on this thread.

cube wrote:Another problem area I see is the smog test laws.


Yeah. It's very sad, but I think that many environmental laws will start to seem like an untenable nuisance once people start to really struggle. I fear for the fate of the forests. Things don't look bright.
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Unread postby Pops » Thu 12 May 2005, 12:19:07

I think Wally-World is the canary.
“Wal-Mart's sales have suffered in recent quarters as soaring gasoline prices cut into household budgets, and the world's No. 1 retailer said it expects energy prices to weigh on second-quarter results too.”
http://news.yahoo.com/s/nm/retail_walmart_earns_dc

This article points out that the lower income folks are feeling the squeeze and the poor Waltons are seeing it first, making a paltry 2.5 BILLION in Q1! Up from last year but not the normal growth they are used too.

In contrast, Target did all right because they aren’t just selling the ‘lowest’ price.
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Unread postby marko » Thu 12 May 2005, 15:19:09

Given the debt-ridden nature of the US economy (on which most of the rest of the world depends) and the US economy's dependence on consumer spending, I think that the first sectors to be hit will be retail and auto manufacturing, as people cut back on spending, followed by the real estate, construction, and financial sectors, as people go bankrupt and default on mortgages, and as housing prices collapse.

When the financial and retail sectors go, so will the rest of the economy, which now depends on finance and retail.
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Trading my truck

Unread postby PlannerBee » Thu 12 May 2005, 20:34:49

Trading my 2004 Dodge Ram 2500 Hemi quad cab short bed on Monday for a Subaru Impreza sedan. I am saving about $125 a month on the payment and about $50 a month on insurance. As for the gas....well it gets about double the Dodge. I figure I'll save $75 a month in gas. I think that is a nice savings. Thing is...I like my truck. It so purty. I luuuuuuuv my truck. It's white and really shiny and I feel so safe in it. But, I am embarrassed to drive it now knowing what I know about oil. My friend suggested I get a bunch of blow up dolls and position them in the truck. That way people will think I need a big vehicle like the Dodge and I won't look so squanderous. I can't do that. She made me laugh though. Boo hoo. Bye truck.
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Unread postby killJOY » Fri 13 May 2005, 05:54:27

I volunteer for the local fire/rescue. When we go on a "dub" call--alarm sounding somewhere at 2 am--and we're sitting there idling all that diesel fuel away, I could almost scream. How will these fleets manage to operate at current capacity when fuel prices triple? I don't think they will, in short.
Peak oil = comet Kohoutek.
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Unread postby Triffin » Wed 18 May 2005, 07:55:31

CEO of SW Airlines ( LUV ) on CNBC this
morning .. BTW he's CEO of the only profitable
airline in the industry and that is primarily
due to the fact that they fly only one plane ..
The Boeing 737 series .. Anyhoo and I quote ..

"No one in our industry can be profitable at
$50.00 oil with the presently available equipment"

Triff ..
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Unread postby RdSnt » Wed 18 May 2005, 07:59:50

smallpoxgirl wrote:Yeah. It's very sad, but I think that many environmental laws will start to seem like an untenable nuisance once people start to really struggle. I fear for the fate of the forests. Things don't look bright.


I agree, as the crisis unfolds environmental laws are going out the window fast. Coal will be king once again in North America. We're not going to have any other choice considering how unprepared we are collectively.
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Unread postby Leanan » Wed 18 May 2005, 09:29:40

I fear you are correct. The effects are unpredictable, and could be nasty. Even if we don't get rid of our environmental laws, you know countries like China will be burning coal like crazy. The resulting global warming will impact us all.

It already is. Glaciers are melting all over the world. Some cities which depend on summer glacier melt for their water supplies are facing the end of their water supply within the decade, when the glaciers melt completely. Meanwhile, research on Antartica has shown that the ice sheet there is thicker than they had thought. Hundreds of feet thicker. This is bad news. If it melts, ocean levels could rise 15 ft. or more. This would be a disaster for coastal areas around the world, and some low-lying island nations would go under completely.

Scientists are also worried about what the sudden flood of cold, fresh water will do to ocean currents. While climate change is generally gradual, it can be quite sudden if ocean currents stop. An example is 1816, "the year without a summer":

http://www.islandnet.com/~see/weather/history/1816.htm

In 1816, it snowed in July in the eastern U.S. A killing frost hit in mid-August. All the crops were lost.

Though it was a volcanic eruption that was likely the cause, modeling suggests the mechanism was a sudden interruption of the "global conveyor belt," the temperature and salinity-driven current that circulates through the Atlantic and keeps Europe so much warmer than the U.S. in winter. So weirdly, global warming may cause some parts of the world to actually get colder.
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Unread postby RdSnt » Wed 18 May 2005, 11:59:35

Leanan wrote:I fear you are correct. The effects are unpredictable, and could be nasty. Even if we don't get rid of our environmental laws, you know countries like China will be burning coal like crazy. The resulting global warming will impact us all.

It already is. Glaciers are melting all over the world. Some cities which depend on summer glacier melt for their water supplies are facing the end of their water supply within the decade, when the glaciers melt completely. Meanwhile, research on Antartica has shown that the ice sheet there is thicker than they had thought. Hundreds of feet thicker. This is bad news. If it melts, ocean levels could rise 15 ft. or more. This would be a disaster for coastal areas around the world, and some low-lying island nations would go under completely.

Scientists are also worried about what the sudden flood of cold, fresh water will do to ocean currents. While climate change is generally gradual, it can be quite sudden if ocean currents stop. An example is 1816, "the year without a summer":

http://www.islandnet.com/~see/weather/history/1816.htm

In 1816, it snowed in July in the eastern U.S. A killing frost hit in mid-August. All the crops were lost.

Though it was a volcanic eruption that was likely the cause, modeling suggests the mechanism was a sudden interruption of the "global conveyor belt," the temperature and salinity-driven current that circulates through the Atlantic and keeps Europe so much warmer than the U.S. in winter. So weirdly, global warming may cause some parts of the world to actually get colder.


http://www.energybulletin.net/5998.html
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Re: Which sector of economy will be hit first ??

Unread postby Outcast_Searcher » Sat 28 Apr 2018, 13:46:51

Why a middle-class lifestyle now costs you over $300,000 a year

https://www.cnbc.com/2018/04/27/sam-dog ... -year.html

More economic-distortion-field-nonsense, which reminds me of the kinds of distortions used around here to make a case for economic doom being in our face.

1). The title is wrong. It should have something like "in the most expensive cities in the world" as part of the title.

2). Some items included are outside what would properly be called "middle class", at least in the context of the US -- unless you're playing very fast and loose and calling the top of the "upper middle class" spectrum middle class.

a). Putting $37,000 a year in one's 401-K is NOT standard middle class behavior, given what real world middle class incomes look like.

b). $25,000+ for food for three. Really? For rich people, perhaps.

c). $15,000 a year for entertainment (including vacation)? Really? Again, if you're complaining about the cost of living, then entertainment is clearly an area which can be saved on.

d). A $1,5 million house? Really? So an hour commute to save a ton on housing isn't possible?

...

This looks like typical left coast thinking. What's next. A minimum wage of $150 an hour needed -- to support the $300,000 a year "middle class" lifestyle?

Yeah, that will work. Just raise taxes. :roll:

...

Yup, with thinking/figures/distortion like this, it's not hard to arrive with ideas like "widespread starvation" in America, etc. claims we see around here from time to time.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Which sector of economy will be hit first ??

Unread postby pstarr » Sat 28 Apr 2018, 14:02:15

You are talking to ghosts.
If you are not a curmudgeon. . . you are not awake.
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