Has the cost of living crisis been manufactured?
As countries around the world come out of Covid-19 lockdowns, surging demand for energy has meant energy prices have increased. Over the past year, the price of gas alone has quadrupled.
Increased costs of energy, gas, electricity, fuel; petrol, diesel are being felt in the pockets of even the middle classes.
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On top of this the prices of other things such as food and telephone, mobile, internet services are rising. Those on low incomes and mid-range incomes will feel it in their pockets in the months and years to come.
Once you compute all this bad news, there is even more in the pipeline as media reports suggest energy prices will rise further in October 2022. This will in turn put a tremendous strain on household budgets.
The problem is global with the effects felt by hundreds of millions of households.
Is the cost of energy prices real or manufactured?
This is a point of debate. Draw your own conclusion.
On the one hand the cost of producing hydrocarbons has not risen. Save that it is manufactured that it has. Crude oil prices had peaked at $183+ in 2008, and we never witnessed such harsh rises in energy costs.
The current crude oil price as I write sit around $100, but it had reached average lows of $20 this time last year (April 2020) during the peak of the global lockdowns.
Production was cut back and in restarting it’s mindboggling to workout how the cost of energy prices could be as a result of this restart in production.
Notwithstanding, in the years prior to the Covid-19 lockdowns there was an oil glut. Therefore there was ample oil for the taking and the prices ranged between $50-$80 per barrel of crude oil.
The Russian-Ukraine war
It could be argued crude oil price rose significantly following the start of the Russian-Ukraine war. The crude oil price began to rise as Russian military forces massed on Ukraine boarders and moreover as the Russian invasion got underway.
With the West shunning away from Russian oil and gas, this would in turn encourage other oil producers to keep prices high so as to benefit.
At the same time since most of the West are still buying Russian oil and gas this is also helping the Russian war chest.
Wheat and other grains
Russia and Ukraine combined produce about one third of the world’s wheat and other grains. This this forced prices to rise in the West. As well as wheat, there’s now a shortage of spring barley, corn sunflowers and sugar beets.
If you’re lucky enough to buy bread or vegetable oil, if the shelves in your local stores or not bear, you will notice the prices have risen.
With no end in sight in the Russian-Ukraine war and with Russia dominating the Black Sea from where most supplies leave Ukraine, it’s easy to see how price will remain high.
Farmers have not been able to get on with their agricultural duties and this is lucky to continue for 2023. They need to be able to sow crops at the right times and harvest without interruptions.
Winners and losers?
Well clearly energy giants are the winners. Due to the increase in energy costs, they have more money than they know what to do with. And you can bet your bottom dollar it’s not going to be spent on green energy.
The oil and gas sector is also a winner with crude oil and natural gas prices likely to remain high for the foreseeable future. Moreover given the West’s frantic talks with Saudi to fill the shortfall in supply.
No doubt too that crop prices will remain high as Russia exploits in land gain in the Ukraine.
With the Biden administration towing the global warming agender, (now ‘climate change’ since is was proven the world was actually cooling) in shutting down U.S. oil supply, it’s difficult to see how the UK and European countries could rely on the U.S. selling oil and gas to them, when the U.S. will struggle with it’s own supply problems.
It’s only going to get worse.
This U.S. climate change drama is leading up to the global reset as is the World Economic Forum’s plan. (politics and big business) At the centre stage of this process is the adoption of blockchain technologies.
The world is fast moving towards a Chinese credit score system, where all wealth is controlled by the government.
The interest rates are slowly creeping up, but this will only benefit those who can afford to save money. Whereas the poor and even the middle classes will be subject to spending their household budgets on the increasing cost of living.
It’s only a crises for those who can’t afford the rising costs.
Where should I invest my money?
Feeling that cost of living crunch?
If not, no doubt you have a ton of money you will be looking to invest so as to profit from all this chaos.
Follow the money!
I’d be looking at dividend paying stocks in the energy sector. Also nuclear energy. Banks and insurance companies. The healthcare sector and the blockchain sector.
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