Rant, rant, rant

...and additional fun...

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What goes up... still goes up.
Erkhyan
dar_han
As of last night, gas prices here have reached $5.91 per gallon (I did the conversion for you US folks). Now, I'd actually like to hear again about the people who complain about $3-$4 prices while living in a country with standards of living an order of magnitude higher than our own.



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Well, it's really much more complicated than just a matter of comparing prices and applying exchange rates.

I agree that fuel prices in the US are generally low. That doesn't make it any less painful when they suddenly increase by 25% over a ten day period, or when you see the local retail distributors raising their prices several times a day even though you know they only receive wholesale shipments once or twice a week. This makes it obvious that there is serious gouging going on.

Europeans pay three or more times the price that US consumers do. But most of the difference is made up of taxes that support benefits not available in most of the US. When comparing EU and US prices, it might be best to strip the taxes from both. When you do that, the difference is nowhere near as shocking.

In the case of Madagascar, I'm not familiar enough with the structure of your society and economy to know how to compare. I do know, however, that you probably have more alternatives for getting from one point to another, at least in the cities, than most Americans have. Public transportation has been suppressed and dismantled aggressively here ever since the end of World War II. The auto manufacturers and oil companies worked together very successfully to make the automobile not only the emotional preference but almost always the sole possible means of transport in the US.

This in turn created an inelastic demand for gasoline fuel. The oil companies could raise their prices at will, and workers who needed to get to their jobs would be forced to pay it or lose their incomes. Producers of goods and food would be forced to pay it because they no longer have any other way to distribute their product. The end result of all this is that a persistent increase of as little as 15% or so in the price of gasoline generates a ripple of inflation through the entire realm of consumer prices without any attendant increase in incomes. So naturally Americans complain about fuel prices, even though they are paying less in physical pennies than most other countries do.

In the end, if you balance out the related differences, oil prices are similar everywhere. In the US and Canada, though, changes in those prices are felt more acutely and in wider ripples, so of course they produce more complaints.

The recent rise in oil price has been 6,5%, but if you count the last months, it's been close to 30%.

It's actually having a huge impact on our lives. Our power plants are almost all gasoline-fueled. Worse yet, our whole food supply depends on oil-hungry trucks. So we've seen sugar prices go up 50%, cooking oil went up 30%, eggs cost 20% more than before - amongst others.

But the most visible sign is the price of rice: it's the very basis of our diet, and it went up 25% to 50% in a few weeks depending on the place. It's gone to the point where the state is mass-buying rice abroad and selling it at a loss here.

Oh, and by the way, our "public" transportation is actually hybrid: state-regulated, but 100% privately owned. In-city fares haven't changed, mostly because the state injects more and more money in keeping them from doing so, but inter-city travel has become prohibitively expensive (in addition to security concerns).

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