How Middle East Turmoil amp Oil Prices Lead to Maxed Out Credit Cards
How Middle East Turmoil & Oil Prices Lead to Maxed Out Credit Cards Skip to content
According to the U.S. Energy Information Administration (EIA), the U.S. relies on OPEC for 48% of its net oil imports. Turmoil in the Middle East easily explains the 48% rise in oil prices since Labor Day 2010. Dictators have threatened to burn oil fields, uprisings in Bahrain hinder the Fifth Fleet’s ability to protect the oil tankers going in and out of the Strait of Hormuz, and OPEC has the ability to reduce our supply at will – causing shortages that can push the price of a barrel of oil up even more. These factors lead to… Second Degree: Higher Prices at the Pump
With the rise in the cost of oil, gas prices in the U.S. have increased 42% since Labor Day 2010. The national average cost of a gallon of gas is $3.83, and in six states, the price has topped the $4 mark. Most experts say that gas prices still haven’t finished responding to oil prices, so we’re going to see even higher prices at the pump. While gas prices rise with oil costs, our salaries don’t rise with gas prices. When we pay substantially more at the pump, there is a… Third Degree: Reduced Cash Availability for Consumers
Let’s face it: A lot of us live mostly paycheck to paycheck with very little room for savings. And just because food and clothing prices have skyrocketed with no end in sight, we can’t expect our salaries to keep up with the demand. You’ve probably already cut expenses and started working with a very tight budget. Combine those sacrifices with the out-of-control unemployment rate, and the addition of higher gas prices is simply too much for some. People are going to have less to spend, which means… Fourth Degree: Less Spending on Extras
When a family has to cut back on expenses, extras are the first things to go. You’ve probably already cut back on eating out, extra clothes, movies, and new electronic devices. You’re smart to cut your spending, but this means that individuals and corporations who produce the projects have been suffering a big cut in revenue. With everyone maintaining low levels of spending, small and large businesses are getting weaker, which adds up to… Fifth Degree: A Weaker Economy
Spending drives our national economy. When money is moving, the economy is healthy. When belts tighten, the national numbers suffer. That’s how our system works: Businesses offer a product, people buy it, and then the company can hire more people, purchase more materials and inventory, pay for transportation and shipping, and spend on third-party services like accounting firms and marketing agencies. The more money businesses have, the longer that list grows. When consumers spend, the domino effect ripples through the economy, creating jobs and wealth along the way. But when spending slows, the economy gets strained. Jobs disappear, products don’t sell, and the cash that was previously circulating now sits as still as businesses’ inventory shelves. This trend doesn’t do anyone any good, and usually people demand that the government do something about it. Washington usually reacts by… Sixth Degree: Printing More Money
“When in doubt, just print more money” seems to be our government’s motto. Whether they print it to send out stimulus checks, or print it to create new government programs that will get more money circulating, creating more money seems like an easy short-term fix for a difficult problem. But it’s a long-term problem, so when the government resorts to this desperate solution, it usually causes… Seventh Degree: Inflation
When the money supply increases, inflation is an obvious – and almost immediate – result. Manufacturers and retailers can’t keep up with the rush in demand, so they raise prices. Meanwhile the value of a dollar quickly decreases. Despite the extra cash in everyone’s pockets, consumers just end up needing to pay more for the same products and services since supply is low. And since income doesn’t rise as quickly as inflation, the only relief is to turn to… Eighth Degree: Credit Cards
If food and gas expenses take up a big chunk of your paycheck, then inflation makes it worse. Everything costs more, and you’re left with very few options. That’s when it’s easy to fall into a dangerous trap: charging living expenses on credit cards. The faster prices rise, the faster you’re going to max out your credit cards.
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By Suzanne Kearns Date September 14, 2021FEATURED PROMOTION
You don’t have to drive 100 miles a day to notice just how high gas prices have risen. Experts are predicting that we’ll see them continue to climb, especially with summer approaching. After I pay more at the pump, I go home to watch the news to learn about international struggles and strife in the major oil-producing nations of the Middle East. And it strikes me: The effect that global news has on our wallets and budgets isn’t going away. In fact, the rise in oil will directly impact our credit card balances. Don’t believe me? Oil prices are just eight degrees of separation from credit card catastrophe. Here’s how.8 Degrees of Separation
First Degree: Middle East Events Create Higher Oil PricesAccording to the U.S. Energy Information Administration (EIA), the U.S. relies on OPEC for 48% of its net oil imports. Turmoil in the Middle East easily explains the 48% rise in oil prices since Labor Day 2010. Dictators have threatened to burn oil fields, uprisings in Bahrain hinder the Fifth Fleet’s ability to protect the oil tankers going in and out of the Strait of Hormuz, and OPEC has the ability to reduce our supply at will – causing shortages that can push the price of a barrel of oil up even more. These factors lead to… Second Degree: Higher Prices at the Pump
With the rise in the cost of oil, gas prices in the U.S. have increased 42% since Labor Day 2010. The national average cost of a gallon of gas is $3.83, and in six states, the price has topped the $4 mark. Most experts say that gas prices still haven’t finished responding to oil prices, so we’re going to see even higher prices at the pump. While gas prices rise with oil costs, our salaries don’t rise with gas prices. When we pay substantially more at the pump, there is a… Third Degree: Reduced Cash Availability for Consumers
Let’s face it: A lot of us live mostly paycheck to paycheck with very little room for savings. And just because food and clothing prices have skyrocketed with no end in sight, we can’t expect our salaries to keep up with the demand. You’ve probably already cut expenses and started working with a very tight budget. Combine those sacrifices with the out-of-control unemployment rate, and the addition of higher gas prices is simply too much for some. People are going to have less to spend, which means… Fourth Degree: Less Spending on Extras
When a family has to cut back on expenses, extras are the first things to go. You’ve probably already cut back on eating out, extra clothes, movies, and new electronic devices. You’re smart to cut your spending, but this means that individuals and corporations who produce the projects have been suffering a big cut in revenue. With everyone maintaining low levels of spending, small and large businesses are getting weaker, which adds up to… Fifth Degree: A Weaker Economy
Spending drives our national economy. When money is moving, the economy is healthy. When belts tighten, the national numbers suffer. That’s how our system works: Businesses offer a product, people buy it, and then the company can hire more people, purchase more materials and inventory, pay for transportation and shipping, and spend on third-party services like accounting firms and marketing agencies. The more money businesses have, the longer that list grows. When consumers spend, the domino effect ripples through the economy, creating jobs and wealth along the way. But when spending slows, the economy gets strained. Jobs disappear, products don’t sell, and the cash that was previously circulating now sits as still as businesses’ inventory shelves. This trend doesn’t do anyone any good, and usually people demand that the government do something about it. Washington usually reacts by… Sixth Degree: Printing More Money
“When in doubt, just print more money” seems to be our government’s motto. Whether they print it to send out stimulus checks, or print it to create new government programs that will get more money circulating, creating more money seems like an easy short-term fix for a difficult problem. But it’s a long-term problem, so when the government resorts to this desperate solution, it usually causes… Seventh Degree: Inflation
When the money supply increases, inflation is an obvious – and almost immediate – result. Manufacturers and retailers can’t keep up with the rush in demand, so they raise prices. Meanwhile the value of a dollar quickly decreases. Despite the extra cash in everyone’s pockets, consumers just end up needing to pay more for the same products and services since supply is low. And since income doesn’t rise as quickly as inflation, the only relief is to turn to… Eighth Degree: Credit Cards
If food and gas expenses take up a big chunk of your paycheck, then inflation makes it worse. Everything costs more, and you’re left with very few options. That’s when it’s easy to fall into a dangerous trap: charging living expenses on credit cards. The faster prices rise, the faster you’re going to max out your credit cards.