Sold Down the River

With each day that passes under the persistent cloud cover that Hurricane Katrina has left over the United States, it has become increasingly clear to the Indignant Citizen that life as we have known it here in this country is over. Gone. Never to return.

When the Indignant Citizen says this, he is not employing hyperbole. Quite simply, the delicate house of cards that passes for our economy is falling in on itself, a few cards at a time. The reason: The card house is built on cheap energy. In case you hadn’t noticed, energy is suddenly quite expensive in relative terms.

A few cards started to collapse when crude oil hit $70 per barrel. That means down the road, everything made from crude oil—gasoline, motor oil, plastics, jet fuel—will be more expensive. That’s down the road.

Presently, however, gasoline futures spiked in late August at more than $2.60 per gallon because Katrina clobbered the Gulf Coast oil refineries. Gasoline futures prices on the New York Mercantile Exchange had been climbing steadily since late May/early June, when they were around $1.40 per gallon. Now, gas stations near the Indignant Citizen’s home consistently post prices above $3 per gallon for regular unleaded, and in some cases it’s around $3.50 per gallon. That means to fill up a Ford Explorer, currently the best selling SUV, with its 22.5-gallon tank a driver could conceivably have to fork over about $60, assuming that driver filled up when the tank got down to about a one-quarter full.

That’s not an insignificant amount of money, particularly if one is paying it out several times a month, or more, depending on how much suburban running around one has to do with kids and shopping and jobs. Ford says its Explorer averages 16 miles per gallon in the city and 21 on the highway. So let’s figure a mix of two-thirds city and one-third highway driving. That should average out to about 19.5 miles per gallon. Assuming, again, the typical driver fills up when the tank gets down to about a quarter, that gives an Explorer driver 16.9 gallons to work with, roughly 330 miles. If that seems like a lot, keep in mind the average American drove 29 miles per day according to the 2001-2002 National Household Travel Survey, conducted by the U.S. Bureau of Transportation Statistics. Surely that number is higher now, but even at the old figure that’s about 11 days worth of gas, if a driver is average, or about $180 in gas each month.

That’s money spent just on gasoline, and just for one car. Most families have more than one car, and more than one daily commuter. It translates to less money to spend on groceries, less on clothes, less on cheap plastic crap at Wal-Mart, less to spend on home entertainment systems … you get the picture. Remove a few more cards from the economic house.

Now just this morning (Thursday), the Indignant Citizen learned via the morning news on the radio that his natural gas home heating bill is set to increase by 70% this winter. Seventy percent! People, that’s nearly double. You know what that means? Last winter, after enjoying for years the free heat that often comes with renting, the Indignant Citizen experienced severe sticker shock when he opened his Nicor gas bill and found that, with the thermostat set at 68 degrees and new energy efficient windows throughout the house, his gas bill topped $200. Immediately the Indignant Citizen cut the thermostat to 65, began wearing layers in the house and cuddled with the missus for warmth. The direct and pleasant benefits of cuddling aside, the gas bills dropped to the $160-per-month range, which was tolerable.

But a 70% cost increase this winter means the Indignant Citizen will be paying in the neighborhood of $275 a month to shiver in his own home.

Upon hearing this, the Indignant Citizen immediately slashed his daily coffee budget by 80%. That means no Starbucks four days a week. Now just think if everyone reacted the same way. Suddenly we see something we’ve never seen before: Starbucks stores closing.

Flick a few more cards out.

The ripple effects of higher energy prices do not stop at Starbucks, though. Higher oil and natural gas prices mean it costs more to move goods from place to place, and to keep the lights on in stores. Retailers aren’t going to just absorb those costs; they’re going to pass them on to consumers. For the Freedom Fries-loving crowd out there, “consumers” means you and the Indignant Citizen, in other words, people who buy shit.

Higher prices might cause people to put off purchases, which means inventory piles up, which means factory orders decline, which means factory workers (the few still employed here) get laid off, which means less spending, which means more layoffs. Can you say “Depression?”

Oh, the Indignant Citizen can hear you snickering out there. “Depression. HAH! He’s lost his fucking mind. I’m clicking over to MLB.com. I want to see what the Yankees magic number is.” Well fuck you. The Yankees magic number is a big, fat, sweaty Z-E-R-O, because they’re not going to do shit in the playoffs, if they even make the playoffs. That team is on a hundred-mile-a-hour bus ride down a dead-end road, and the crash at the end will not be pretty. All that will be left will be 206 million one dollar bills slowly blowing away in the breeze of a swinging third strike. Fucking Yankees fans. . . .

But we were talking about the Depression. Think about this, people. Don’t you see the connections? The lines between the dots are thick and black. When energy becomes expensive, everything becomes more expensive. When everything suddenly costs more, but salaries do not increase at a rate sufficient to cover the additional expense, people cut back on spending. When that happens, the economy slows down.

We’ve been sold down the river by morally bankrupt politicians and their appointed policy makers. They told us the future was bright and full of promise. But they squandered tomorrow on yesterday’s votes. The Indignant Citizen fears, and with good reason, that the days of hopping in the car and driving to, say, Madison, Wis., for a long weekend on a whim are near an end. So, too, is getting on an airplane and flying coast-to-coast-to-coast (that’s “round trip” for you Operation Iraqi Freedom believers) for less than the cost of two courtside seats at a Bulls game.

Can we live with that? Sure. But it wasn’t part of the contract. They promised us our way of life was “not negotiable.” In a way, they were right. Turns out no negotiation was necessary, or even offered.