Thursday 16 July 2009

How petrol's cheapness affects all prices

Today, I discovered an article showing that prices in the Euro zone are lower than they were last year.

However, those who think it relates to an economic collapse comparable to the Great Depression are entirely wrong. The only reason prices in the Euro zone are lower now than they were a year ago is the increased cheapness of petrol! Though I have not got figure on the volume of petrol one euro will buy for various European nations now and in July last year, it is clear that a barrel of oil has become more than twice as cheap as it was a year ago.

It is true though that the cheapness of oil has been increased by reduced fears of a major recession. However, what the chief point is that the cheapness of petrol has a dominating effect on the price of everything because petrol is essential to the present-day structure of goods transport. Where petrol is less cheap, everything else becomes less cheap too, which is why people here in Australia cannot accept that ecologically our living costs are outrageously low since at petrol prices that would reduce Australia's greenhouse emissions to an acceptable level, very few basic foods and other goods would be affordable at all.

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