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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (56641)	11/30/2004 3:30:26 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

<Currency impact seems to me to be more like 75% of the explanation. > Ray, retail petrol prices in New Zealand haven't gone up too painfully. 96RON petrol is now only NZ$1.20 per litre while NZ$1 is worth US71c. In 2000, petrol was about NZ$1.10 per litre [a few seconds later and the amazing Google comes up with something even better than I hoped for] med.govt.nz But in Y2K, the NZ$1 was as low as US39c and mostly under NZ50c. Therefore, New Zealanders with NZ$ to spend have been having a LOT of fun. Petrol costs haven't been much of an issue. Any increases in petrol prices are softened at the retail pump because the high petrol duty [not a percentage] and distribution charges compared with the ex-refinery cost are large, so the pump price change due to refinery price changes is small. But back in the USA, where greedy monster SUVs rule the road, taxes are smaller and ex-refinery prices are seen up close and personal at the retail pump. All is transacted in US$. So when people pump 100 litres of petrol into their hog-beast, they are noticing the difference from when Dubai crude was $15 a barrel now that it's $50 a barrel. Compared with GDP per capita of US$38,000 per year, cia.gov filling the SUV still isn't a specially big deal. But it must be squeezing a lot of people, like a mosquito bite isn't really a big deal, but it's very noticeable. The USA is the world champion gasoline guzzler, so the USA has most motivation to reduce consumption. People in Japan already travel by train and buy dinky little cars, so their incentive to cut petrol consumption is small. Meanwhile, in Dubai and the other oil selling countries, they have had a huge pay rise. They can't buy holidays in New Zealand any cheaper in US$ than they could 4 years ago when oil was a third the price. But they can go to Disneyland USA and buy the latest military toys from the USA and buy a bunch of CDMA ASICs and the other stuff that the USA produces and get three times as much of it as they could four years ago. In the 1970s, there was the worry over "how to recycle the petrodollars?" As is usual with people with money, oil producers didn't find much problem in recycling all the dollars in the world. Stacking up money is much, much more difficult than figuring out ways to get rid of it in a hurry. Sisyphus was lucky to just have a rock to roll up the hill. stripe.colorado.edu Now there is the worry about the US deficits. The USA is nearly half-price compared with NZ, so Americans won't be laughing at Auckland's restaurant prices as they were in Y2K during America's Cup racing. I heard a guy talking to somebody on his cellphone saying "Yeah, $30. No, no, that included everything, not just the entree". He was enjoying how cheap it was here. A Kiwi on tour was shell-shocked at prices for a cup of coffee or glass of wine in the USA [or Europe]. Now Kiwis can go swanning around the USA tossing our superior currency around to the yokels. If Homeland Security wasn't such a hassle and absurd joke, we probably would. It's true the deficit is reminiscent of a bull in a China shop, rather than a mouse, so it might not go quietly into the night. But King George II is on the case in his bullfighter garb. I hope he does better than Mr "Hole in Juan" thecopymacheen.com Note sword in the back of the aggrieved bull. Mqurice