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Wednesday, January 25, 2012

Relative Costs

It is all calculated and connected.

Hey folks,

It amazes me that some still do not understand what I mean when I say "The cost of Energy goes up, so does the cost of EVERYTHING else." It does truly amaze me that some can not get this concept. So I want to spend some time today talking about Relative Costs.

Factory A Produces Product B, Ships it to Store C, where you go and buy it. Lets start with Factory A. Factory A has to buy the Material to make Product B. They have to buy the Boxes to pack it in to ship it out. All this, most of the time, have to be Shipped IN. So Factory A has to pay the Fuel Costs to have that all shipped in BEFORE they even start Production.

Now that they have the Materials in route, they have to pay for the Energy to run the Factory. They need Electric to operate the Machines, keep the lights on, Heat, AC, ETC. So now the Materials arrive, and they Produce Product B. Lets say it cost them $1.00 to produce it.

After Production, they now pack it up and Ship it out. They now pay a Shipping or Delivery Company, say $1.00 to take it to Store C. Now Store C buys it for $2.25. That is to cover Costs and a little bit for a Profit. Now Product B is on the shelve waiting for you to come in and buy it. But wait...

Store C has to light the Sign, keep the Lights on, Heat, AC, ETC. as well. They now have to cover the Cost of buying the Product B. Plus a little bit to make a Profit. So Product B NOW costs you $3.25.

Now if the Price of Oil goes up? It will now cost MORE for this whole process. From buying the Material, Boxes, Power to produce, then Ship, ALL goes up. Now Product B costs $1.25 to Produce. $1.25 to Ship. Store C now has to buy it for $2.75. Store C's Electric Bill just went up also. So just to make about the same Profit, and cover the costs, Product B now cost you $3.75.

Do not forget, while all this is happening, YOUR Electric Bill just went up. It now cost you MORE to keep the lights on. More to heat your Home. More to run the AC. Go to the Gas Station to get fuel to go to Store C, or anywhere, it now cost YOU more there as well.

The decision to NOT run a Pipeline, Drill Here, or use our OWN resources in anyway, WILL effect ALL of us. It doesn't matter what side of the Political Isle you are on. It doesn't matter if you are Black or White. It doesn't matter what Religion you believe in. It WILL effect every Man, Woman, and Child in this Country. When I think about this, I think about those on Fixed Incomes. Retired People. Unemployed People. Disabled People. Even Single Family Homes. People that do NOT have unlimited resources. You know, like those in Congress and Government making these decisions for the rest of us.

All this is also leaving aside another absolute fact. That increasing our dependency on Foreign Governments, that do not like us to begin with, DECREASES our National Security and general well being. When you realize that all this can be avoided by simply saying YES, we will use our own resources. We WILL allow a Pipeline to go through our Great Country. We WILL create Tens to Hundreds of Thousands of new Jobs. We WILL decrease our dependency on Foreign Governments. We WILL reduce the Cost of EVERYTHING. Yet we do NOT do it. One would have to wonder, WHY?
Peter

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