Stagflation occurs when costs increase for commodities, while wages are stagnant or even declining. In the peak oil world that we live in, the cost of commodities will continue to rise. Here’s two examples:
One is Delta Gas’ hike for fixed service charges. The 35% increase – from $15.30 to $20.70 – will affect everyone, no matter how much gas they use. The cost of gas itself is going up 2.6%, the impact of which will vary based upon how much is used. Now, some will say that an extra $5.40 per month isn’t that much and that an increase of 2.6% in gas isn’t that much. But it all adds up – especially when your wages or social security benefits haven’t increased.
The other example of rising commodity costs is the recent 37% rate hike by Kentucky American for water use. Over the last 18 months water bills here have increased by at least 59% due to the hikes.
The picture below illustrates a couple of the reasons for the increases. First, the amount of infrastructure in place at the new facility is enormous, and thus expensive. Second, the amount of energy required to get that water up that hill and then over 30 miles to us is enormous as well. As energy prices continue to rise, look for further increases in water costs. Fortunately for us, Kentucky American only expects this plant to provide for our needs for “20 to 30 years.” So only two to three more decades of paying this plant off, and THEN we can perhaps get real about our water supply. The oil shock could derail even that though….and this may be the last water plant of its size that ever gets built around here.
A nifty photo by Charles Bertram of the Herald Leader.