As a small business owner, here’s how I see what happened to make America, and the world, for that matter in the tough spot we’re all in…
When oil went up, people didn’t have as much discretionary income. While gas prices have always been high in other parts of the world, when it hit America, it created an impact. Americans, already stretched thin and living beyond their means, just couldn’t pay all their expenses. Those who could, started borrowing more money. Those who couldn’t started falling behind on their mortgages.
The other side was how oil affected business. Tons of products have oil(petroleum) in them. raw material prices went up dramatically because the price of oil was affecting these prices. Then, the prices of finished products started going up even though America was not ready for higher prices.
The price of oil also really affected the transportation business. Once oil went up, the price to transport products also went up. Small business owners started to deal with the higher costs of products and higher transportation costs. Consumers, however, weren’t interested in paying the higher prices.
But, the connection between the two is what, I think, led to the House of cards falling down.
If we can reduce our dependence on foreign oil and start living within our means, I think we will be much better off.