Preparing for the High Gas Prices Ahead

Kimberly Watson, Editor in Chief
March 05, 2012 /

Job creation is on the upswing with companies expanding and investing in new equipment. They are now prepared to spend any carefully saved assets to start increasing the flow of products onto a demanding marketplace.  The hard pressed consumers are breathing more easily and ready to loosen those tightly tied, purse strings and look forward to buying upend items such as new vehicles!

However, clouds are gathering on the horizon. It is all related to energy, in particular oil, which is the major influencer for so many factors in the economy of today. Although energy prices dropped by 8% during the second half of last year, various reports show they are expected to rise between 8% to 10% by this summer.

Warnings are given to expect and prepare for the national price of regular unleaded gasoline to rocket up to $4.00 a gallon as the summer season approaches, with some forecasts predicting a record high of $4.11. Adding to this is that diesel has been maintaining a relatively high price and according to market related reports, could increase to over $4.20 per gallon.

For any type of business, these financial factors could determine the scenario for any expansion programs and potential financial investments in new materials, equipment and staff. All business sectors and consumers have been forced to exercise strong disciplines during the past few years and these forecasts, emphasized by the events in theMiddle East, are likely to start accountants and consumers sharpening their pencils and seeking new ways to cut costs.

The average business person is now going to be motivated to extend their perceptions away from the European debt and consider the Iranian threat to close the Strait of Hormuz. This occurrence would cause a severe spike in the oil price, as about 20% of the oil supply for the world passes through the Strait.

 

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