Thursday, March 24, 2011

Food and gas prices and the survival of the American middle Class

Please read the article below before reading this. The article describes well the decline in American’s middle class. Many things mentioned remind me of the first years after the 2001 economic collapse, how people slowly change their habits, how certain things once taken for granted are little by little out of your economic possibilities.
Something that will have a huge impact the average American’s life will be the inflation combined with the typical American distribution that took for granted that everyone would both have a car and be able to afford fuel for it. 

You already hear about people not being able to do that and now going back to using public transportation. In some cases they simple don’t each where you’re going or multiple buses are required. Here in Argentina, since we already had a large percentage of poverty to being with, the public transportation system was in constant exercise so that makes things easier when that user group grows. When you don’t ever have such system in effect because there was no need to satisfy, you have to start from zero. Very likely, little by little more bus lines will be created to deal with the new demands. From an Urban point of view, in most of south America its already expected of you to walk, specially for close distances. This means a) stores are placed close to neighborhoods b) The infrastructure is there for you to walk form one place to another. It was surprising for me to realize that in some Texas cities you simply couldn’t walk from point a to point be, even if point b was 4 blocks away, you just had to take a car. Unthinkable not only for 3rd world countries, but also for modern architecture being implemented in today’s first world countries as well. As inflation and gas prices convert more middle class into poor, people will have no other option but to walk more, and the future urbanizations will have to keep this in mind as well in spite of previous cultural traditions. Cars that make inefficient use of fuel, even the food (and their ever increasing prices) will slowly change the what was considered typical. You buy a car now keeping in mind how much fuel it uses, you plan your meals and dinners based on what type of food your budget allows you to buy. The article mentions using wood for heating, but soon enough people will notice that smaller houses are cheaper and easier to heat: No more extra rooms you don’t need, or ridiculously large spaces that aren’t being used.

Suddenly the “retreat”, supposedly the solution to every possible survival need has this huge disadvantage: unaffordable gas prices. How’s that for living ½ a gas tank away from the nearest town? And the crime problem such isolation comes along way hasn’t made itself as evident as it should for a very simple reason: Things just aren’t that bad yet. Many hard lessons will be learned if they do. Many of this perfect survival solutions have worked well so far because they haven’t been put to any real test. Unfortunately that changing and some hard lessons are being learned.
 Things will have to become more efficient because the average budget just wont allow it any other way.
Take care folks.


Gas, food prices double whammy for rural families
Posted: 5:26am on Mar 21, 2011; Modified: 5:30am on Mar 21, 2011
Twice a week, Myriam Garcia puts snow chains on her 22-year-old gas guzzler and noses two miles down the hill from her trailer in rural western Montana. Then, instead of turning south and driving the 45 miles to Helena for grocery shopping like she used to, she parks on the side of the road and waits for a friend or neighbor heading into town to give her a lift.
In Helena, Jackie Merenz loads her beat-up SUV with juice boxes, graham crackers and apple sauce she bought at Walmart for her 6-year-old daughter's birthday party. The 60-mile round trip she makes twice a week for groceries hits her wallet hard - the food stamps don't go far, gas prices are skyrocketing and to top it off, her husband had to stop working after getting injured.
Living out in Montana's Big Sky Country often means driving long distances for the basic necessities, and people on tight budgets like Garcia, 49, and Merenz, 26, have long been creative in making ends meet.
But with food prices up nearly 4 percent last month - the biggest leap in 36 years - and the national average for a gallon of gas at a whopping $3.57, this economic double-whammy is stretching family budgets to the breaking point.
"It took me $50 to fill up my car yesterday. And it will be gone in three days, probably," Merenz said. "We already live in HUD housing, we're already on Medicaid, we already have food stamps - and we still struggle."
Merenz and her husband Richard moved to a small house in Boulder, Mont., two years ago after he had sinus surgery and the doctor told him the Oklahoma humidity was not good for him. He got a job at the Montana Developmental Center, which caters to people with developmental disabilities and behavioral problems.
But then in December, a patient broke his nose, knocking Richard Merenz out of work and leaving him in need of two operations. It couldn't have come at a worse time, with the rising prices of milk and baby food for their three children ages 6, 2 and 8 months.
"Right now, we're just kind of winging it," Jackie Merenz said.
Merenz, balancing 2-year-old son Taylor on her hip as she loads the last boxes of Capri-Sun, said she's had to pay $200 more a month in groceries the last couple of months - on top of the food stamps she uses. Her daughter Andrea's birthday party will be simple, featuring pin-the-tail-on-the-donkey with her kindergarten friends.
About 75 miles north of the Merenzes, Garcia lives on 20 acres of pristine country near Craig. She's lived there for 12 years in a trailer that's off the electrical grid, raising chickens and three sons. The children are now grown. Garcia is disabled and receives Social Security payments.
Now gas prices have forced her frugality to an extreme. She runs her generator three hours a day, flipping it on to watch the news at 5 p.m. and for chores afterward. Sometimes the choice comes down to paying for fuel for her home and car or buying food.
"Before, I had three boys so I was always creative with a limited amount of funds. Now I have to be even more creative because gas is so high," Garcia said.
She uses a wood stove and a propane heater for warmth and takes housesitting jobs in Helena whenever she can to cut down on expenses.
"That is a big, big help. Especially in the wintertime. I get to eat, I get to do laundry and there's no expenditure on gas once I get there," she said. "It is kind of a nice little break where you have electricity at the flick of a button and you don't have to arrange your day around electricity and gas."
When she's back home and has to make the twice-weekly journey into town, she tries to avoid driving the long stretch of highway into Helena by carpooling whenever she can. She'll arrange rides with friends and neighbors, splitting the cost of gas.
"I can't really afford to drive to town. If I can drive into town once a month, I'm lucky," she said. "A lot of time people from Craig are leaving for town and I'll catch a ride with them. But I'm too scared to get in with strangers."
She's holding out for summer, when her garden will yield fresh vegetables and her chickens start laying again, giving her some relief from rising prices. But she is convinced the cost of gas and food will only keep going up, and she is preparing for even more frugal measures.
Garcia said she'd like to see the nation's lawmakers take a page from Lee Iacocca, who took an annual salary of just $1 when he set about turning around Chrysler in the 1980s. Politicians should do the same now to help turn around the U.S., Garcia said, and funnel the salary they forego back into Medicare and food and services for children.
"I'd like to see them step up. They already have income, they're already very wealthy - many of them are," she said. "Our country's in trouble. It wouldn't be forever. But it would give me faith and hope because I love America."


dwr said...

While I agree that the middle class is under attack, I'm not sure the people profiled in the article could have ever been considered part of the middle class.

Doug from Oz said...

No, they aren't middle class, but if people like this, who are used to budgeting, are having trouble, can you imagine the problems anyone of the "put it on plastic" mindset is going to have when they are in the same situation? I only have one credit card, with a low limit, and only have that for buying online. But whenever I contact the bank about something there's always the offer to increase my limit... I'm VERY glad of my budgeting skills, they've saved my neck a lot, that and the ability to delay gratification.
With regards to the fuel and travel issue, there are huge long traffic jams each weekday morning and afternoon on the main roads in and out of Brisbane. It's just been a problem in the last twelve or so years, as the housing prices have driven more people further up and down the coast, into housing estates much like those in the US, with few nearby amenities. And it's definitely the real estate "get rich quick" "RE only goes up in value" bandwagon that has caused it.

yankee_dollar said...

Jim Kunstler writes about these themes of economic collapse a lot. He makes some good points about urban design problems and energy dependence. However I find his far left politics irritating, and he thinks people are too stupid to adapt to changing conditions.

Anonymous said...

It is Montana for goodness sake, why not put an elk or moose in the freezer and save on the meat bill? Up here in Alberta it only costs around $60 for a license.

Anonymous said...

Grocery store 2 times a week? Seems she needs to cut that down to at least once every 2 weeks!

Anonymous said...

DWR - "Middle class" ain't what she used to me.

I know that's a real hard thing for many people to grasp but in a great many parts of the country what 30-40-50 years ago would have been considerdd a very comfortable income is today barely survivable. And that's NOT because people are eating out lobster and steak dinners all the time or insisting on the 50 foot weekend yaht!

The other day a work a manager told me he paid $1,200 this winter for heating oil. (Hate to say what I paid!) He said he doesn't know how he will be able to afford heat next winter.

He wasn't just saying that rhetorically. We've spoken about the economy and politics before but this time I saw real fear and hopelessness on his face. Never saw that on him before. Scared the willies out of me!!

alaska said...

Got to love it when folks that are "struggling" and on food stamps waste money on Capri-Suns. Yeah, that is a cheap alternative. Water and milk work just fine for my kids and we live very comfortably. Baby food? That is not cheap either and not needed to feed an 8 month old. Something tells me that is just one example of the bad decisions some people make that ends up getting them in this predicament. Like having three kids you can't afford...

Anonymous said...

@ Alaska
While I hate tho think that people should think of children in terms of 'affordable' and 'not affordable', you're right to state that the woman should spent her money better than paying for Capri-suns and babyfood, going to the store twice a week....

Ed from Europe

Personal Preparedness Inc said...

I agree with you 100 percent. The “retreat” idea sounds good at first, until you do some research. In WWII, many people who had family farms we’re raped and massacred. I believe you have mentioned that the same thing happened to many isolated farms in Argentina during its economic crisis. Even today some of the most horrific crimes happen to families living far outside town.

I believe the path is, as you say, the “small house movement." While I live in South Florida, and winter basically doesn’t exist, heating is not a problem.

However, a smaller house is good for many reasons. Having seen the “writing on the wall,” I’m still waiting to buy a post WWII era house under 1000 sq ft. They’re usually 800 - 900 sq ft. in the few walkable neighborhoods we still have down here. (We sure love our cars in Miami!).

The houses built back then had wood floors and had a 3ft crawl space to help with passive cooling as they were built pre - A/C. With a couple of ceiling fans and the windows open you don’t even need A/C except for the hottest of days.

With a few solar panels you have all your power covered. We are at sea level here so a well is a no-brainer. Between that, a brown water system, and a basic rain catchment and you're good to go. A small house usually means a big yard down here and that could be used for your garden, a fish pond, etc...

I love your blog. Thanks for sharing your experience in Argentina. Ciao boludo! ;)moc

David said...

Those profiled in the story illustrate how poor decision-making contributes to difficulty. The older woman raised three sons? Where are they? The story implied she's on her own, without any familial assistance, awaiting politicians to take more from other unknown people to "help her."

Dependence leads to suffering.

As to prices, there are ample data available to suggest price ramps are the final surge before real hardship arrives, taking down prices but also incomes (even more). What happens should gas at $3.62/gal & median household income @ $50,233 (2006) go to $1.81/gal and $20,000, respectively?

Aurochs said...

I'm wondering about the three sons she has -- are they boys or men? What kind of man lets his mom hitch-hike to the grocery store? They should be helping her out, not letting her depend on food stamps.

Anonymous said...

"...and he thinks people are too stupid to adapt to changing conditions."

The Cricket and the Ant

The cricket had sung her song
all summer long
but found her victuals too few
when the north wind blew.
Nowhere could she espy
a single morsel of worm or fly.

Her neighbor, the ant, might,
she thought, help her in her plight,
and she begged her for a little grain
till summer would come back again.

“By next August I’ll repay both
Interest and principal; animal’s oath.”

Now, the ant may have a fault or two
But lending is not something she will do.
She asked what the cricket did in summer.

“By night and day, to any comer
I sang whenever I had the chance.”

“You sang, did you? That’s nice. Now dance.”

hsu said...

For people wondering where the kids are, they left home for the big city.

That's pretty much the story of small towns - the children leave when they turn 18.

The best bet for the mother is to relocate near one of her kids, but many people can't or won't do that.

My parents know that they should move near myself or my sister, but they have been putting that off for years.

Parents can be *stubborn*.

Maldek said...

FerFal's statement regarding retreats is so true.

I can support it 100%; here in Paraguay (thats the small country east of argentina), a lot of german expats come and with them come their european vision of "nature + beauty + many acres of land = a sustainable living dream".

Quite frequently the opposite happens. Crime is a serious issue.
a) Home invasions, and they can take their time and maybe enjoy your house, wife and daughters for a few days. No one will notice.

b) If you want to go on vacation (or visit your parents in europe) it might happen your whole house is no more when you return.
Not just robbed, it might be de-constructed, brick by brick

Regarding the article:
A nice real-life demonstration but very leftist. The fact that people live for themselfs, rather than as a family is the biggest flaw a society can have.

These families deserve it much worse than what they have now. Hate me for this statement if you wish but why has society to take care of the elderly lady when she got 3 adult sons? What are they doing?

A guy with 3 kids can not work for months because his nose got broken? What kind of disability is that?

NONE of them should rely on any socialist programs.

PomPomPOm said...

Hmmmm, in Europe gas is 1.5€/L that's 2.1$/L or 7.94$/Gallon.

Yes, about 8 bucks per gallon.

But nobody considers going 100km round trip for groceries twice a week. That's insane.

Chris said...

Food for Thought? Some comments criticize the lady in the story and her choices, specifically when it comes to her choice of party treats - i.e., Capri-Sun. We do not know all the details, however. Maybe she has been saving up for this party: a quarter here, a dime there, for months. Maybe she wanted to treat her young'uns with something nice besides the daily poverty grind. It's something to consider.

fidalgoman said...

I sympathize with the people in the article but the fact is that living in a rural homestead in today’s world is a low income affair that puts you at risk in economic fluctuations. Also it puts you at greater risk for criminal activity.

One thing that reading FerFAL’s book and blog has taught me is you must be flexible and learn as situations change. The world we live in is not the world of our parents and the world of our children is not going to be our world. We must learn how to adapt and prosper. Adapting is not simple acquiescence to the status quo but rather building our future in a world climate that is always changing. Ther is no going back, that world is ceasing to exist

Note, it looks like people are still heading to the old blog rather than the new one.

Anonymous said...

It is hard to know what more anyone could do for this family. They are certainly using every available gov't. program. I agree, not sure they were ever "middle class" but even the "real" middle class has been screwed by the loss of buying power of its $, with worse to come.

$1200/tr for! I will probably pay $4000. up here this year in frozen New England, USA, with the thermostat at 64 days and 62 nites. Not sure what will happen as oil continues to rise...I have lots of wool blankets currently in use, as well as down bags available. Oil and food will take up increasing % of income.


A. Ruiz said...

I can completely see what ferfal means right now, that living in the city has it benefits.
I live in Chicago and I can walk in 5 minutes to an Aldi, Walgreens, 2 banks, Bakery, 2 ethnic grocery stores.
The bus is on my front door and the subway station is 10 minutes away and no....this isn't a fancy neighborhood but a working class one.

But the point is.........I don't need a car. I have a big giant cart to haul my groceries and a bike when the weather is warm. I always smile when I'm asked by suburban and rural living friends "how can you live in the city?". I can't afford not to.

Anyway, high prices will mean more fuel efficent cars and less SUV. If I have kids, Ill need a car...but I'll get either high mileage diesel or look into natural gas or make my own biofuel, I'm willing to put in the work.

Ed from Europe said...

Dansez maintenant.

Hi Pompompom,
my gas is already 1,65€ ......

I drive my tractor in pearls... said...

I understand the ease of living in a city on a tiny lot and walking to the grocery store. But when that store is empty and your postage stamp of a yard doesnt yield much, my rural, farm living doesnt look like such a bad idea.

Our farm has our family (several generations) on it - 3 houses with plans/places for others too. Its not perfect but we arent alone either and we raise most of our own food with many hands for the work.

Town is nice - they do have expensive coffee ;) But if need be, I can stay home for weeks and save my diesel that runs my truck.

Slowly stocking up - limiting trips to the store are 2 things that could really raise the situation for those in this article.

I drive my tractor in pearls... said...

One more comment - in addition to size, the materials used and the type of house will probably change. Basements keep a constant temperature and if you build a walk out basement, you dont even realize you are in one... Windows and light are fab!

Also - a concrete house is extremely energy efficient. Our concrete home has a minimum R-50 as well as being bullet proof :) Concrete also retains heat when you want to be warm and is nice and cool when you are in the summer. Add to that a metal roof and you have a structure that is fire proof and bullet proof. It adds to the safety factor of living away from town.

Lorrain Roth said...

If anyone has 2 or 3 acres of land, they should plant it with corn, potatoes, etc. to sustain them during hard times. My grandparents did that and had canned veggies all winter...

Anonymous said...

Geez, Anon, don't you have Natural Gas up in New England?

I bought an old house (with new-er windows, maybe 12 years old) and a giant (But new/85% efficient oil burner). They were going through $4-5000 a year in Oil. Too much!

I switched to Natural Gas and an 85% efficient boiler with holding tank. I only used about $1500 in gas over the past year with the house set at 69-70 for most of the day in winter in Southern NY. The conversion cost me about $5 or 6 K. I had a few other upgrades put in too such as multiple zones and an indirect hot water tank.

As for the Capri-Sun people, what do you want? Brainwashed sheeple who have heard on the TV that "There's only one, only one, Capri Sun! It's great tastin' fun when you punch open ooooooonnneeeee".

Water works just as well, even better - there's no corn syrup in there.

Anonymous said...

People who live off the grid and on the dole are hardly middle class.

And Capri Sun? Seriously? That stuff is junk. It would be cheaper and healthier to let the kids drink tap water.

Doug from Oz said...

Unleaded in Brisbane is $1.50 a litre. Which is a bit below the price just before the GFC hit. (I think the price then was $1.65)

Doug from Oz said...

BTW, good choice of article, Ferfal. Over 20 comments!

Anonymous said...

I see these people in Wal-Mart every time I'm there. They come twice a week in broken down cars to buy stupid products(such as Capri Sun) with their food stamps, trailing 3 or 4 kids they can't afford, heading for the free clinic paid for by the government at taxpayer expense, smoking cigarettes, and basically not trying to make a better life for themselves. They are perfectly satisfied to live like pigs just so long as they don't have to work or pay taxes. I have no sympathy for them.

templar knight

Don Williams said...

It's amazing that people are so critical of a small amount of money going to US citizens -- but have not voiced any complaints about the massive amounts of taxpayer dollars that go for Welfare for the Rich.

Spending roughly $1 Trillion per year to protect the foreign investments of Big Oil and other US plutocrats, for example. A military budget that is larger than the next 23 major military powers COMBINED --most of whom are our NATO allies.

And that Financial Bailout for Wall Street just flowed past like a cool summer breeze.

I drive my tractor in pearls... said...

I am sure most of this crowd are also against the large sums of funds sent to the UN and other countries. But this "corporate welfare" that seems to be so popular to disparage these days is a misnomer. The United States has the LARGEST CORPORATE TAX rate in the world. There are TRILLIONS of dollars that will NEVER come back home because of the stupidly high rate. Want to know why Corporations move over seas or create plants and other things elsewhere, it is this "corporate welfare" you seem to think is going on, but is nothing more than leftist talking points.

And what does the corporate tax rate have to do with people making stupid personal choices?

Anonymous said...

Yes, Don, the movie "Inside Job" told it all. And they're still free and walking around with their billions. Plutocracy by any other name..

As for the fellow suggesting natural gas for me not oil, I have one word.."Kaboom". Natural gas is like flying..extremely safe until it isn't. If I have to freeze I'll freeze but no natgas for me, thanks.


Anonymous said...

Don, I usually don't reply to boilerplate nonsense, but huge sums of money are given out as welfare(and I use the term to include all forms of money taken from one group, the taxpayer, and given to another group) every year in the US, somewhere on the order of $2 trillion.

Now, if we had been talking about corporate welfare queens, like GE, I would have gladly lowered the boom on them as well. So just because I didn't slam them while criticizing the welfare underclass doesn't in any way mean I approve of corporate welfare any more than I do non-corporate. Is that clear enough for you?

As for the Wall Street bailout, that should never have happened, just like all those idiot loans backed by the US Government(Freddie and Fannie, for the information challenged) shouldn't have happened either. These bad loans were bundled together and turned into MBS derivitives, and sold far and wide. When these folks didn't pay their mortgages, the value of the securities plunged, and the market crashed.

So, my point, without government backing, no loans would have been made to people who couldn't afford them, no derivitives would have existed, and no Wall Street bailout would have been needed. You see, that's how the government distorts markets when it gets involved. All in the name of doing good. I'm sure you were on board for those few measly bucks that went to the deserving. It ended up costing something like $6 trillion, maybe more. More evidence of how do-gooders interfere in free markets and destroy them, costing us all.

templar knight

Anonymous said...

Good article...

While I am not certain that the city is any place that I would want to be when/if there is an economic collapse (far more parasites to harm one's self)- I agree that the "retreat" is not necessarily ideal either. Small towns and communities would be better (in the West preferably - again, fewer people.)

What I get from the article: get to know your neighbors before hard times strike, make a trip to the store worth your while - stock up on canned goods and hearty foods.

Rather than rely solely on one type of fuel to heat your home - have a backup...electric(solar,turbine) wood, propane, oil etc.

Have a means to protect yourself and know *how* to use it - or use it as a means to shoot a deer if you need.

DON'T FORGET WATER! If electricity goes out in any emergency, something as simple as filling empty milk jugs with tap water can save you in a dire situation. Keep the jugs in a dark, dry place... Plastic milk jugs tend to degenerate after a while so rotate out once every 3-4 months...or invest in a more durable container.

Most importantly, don't advertise that you are "prepared" to anyone unless you **completely** trust them...

By no means is this a complete way to be prepared, but most Americans don't have more than a couple day's food in their home...this would be an improvement - but not the be all, end all of preparedness...