"Cost of Gas"

40 years ago I loved to ride my go-cart that a neighbor had welded together for me and my brother to play with. I remember turning in 4 empty pop bottles to get 40 cents and then buying a gallon of gasoline and putting a nickel in my pocket from the change. Today gasoline at the local pump is $3.29 a gallon!

Today it seems no matter where I am people seem to be worried about the increasing cost of living and the danger this price increase reflects upon their current plans as well as their plans for their future and retirement. But this little bit of advice from Warren Buffett has tremendous impact for your life today, as well as tomorrow, if you find yourself in that same worrisome category.

• “No matter how serene today may be, tomorrow is always uncertain. Don’t let reality spook you. Every generation believes the world as they know it is coming unstuck. And yet human nature has the uncanny habit of overcoming disaster.” [i]

So what happened to the cost of a gallon of gasoline?

• Well first of all divide the $3.29 of today’s price by 4.

• That gives you $0.8225.

• This means that the real cost of a gallon of gasoline has really only increase by $0.4725 per gallon over the past 40 years.

• That’s a $0.0118 per year cost increase.

But now consider the remaining $2.47 cost ($3.29 -$0.8225) of a gallon of gasoline today. This additional cost is due to the depreciating value of your dollar bill over the last 40 years. Your dollar devaluation (and other government interventions as mentioned below) accounts for the $2.47 of the increase in a gallon of gasoline… that’s over 6 cents per year per gallon price increase because of the hidden taxes which are the indirect results of the Federal Reserve’s monetary policies over the last 40 years.

You see most commodity prices aren’t really going up that much, many are actually going down, as my friend Nelson Nash explains with his “5 factor” explanation. “In 1960 it cost about $16 dollars/day for a hospital room. That was the same price that Holiday Inn charged for a room. Today that Holiday Inn room will run you a little over $80 and they’ll even throw in a free continental breakfast, which wasn’t available for you to enjoy back in 1960. If you will divide $80 by 5 you’ll see that the cost of a Holiday Inn room hasn’t really gone up ($80.00 / 5 = $16) and you get breakfast today when you didn’t 40 years ago.

So what causes prices to increase? Look again at the cost of gasoline. In the 1970’s the federal government began to penalize “new” oil sales (oil that had been discovered in this country after the OPEC oil crisis started) by imposing a higher tax on “new” oil. That meant that if your oil well had been flowing prior to the OPEC agreement you didn’t have to pay the new tax. You can see that this tax punished the research and development of new oil wells in this country and therefore drove the market to foreign oil dependence and subsequently higher gasoline prices.
Due to this tax on “new” oil, my $0.35 a gallon gasoline in 1970 went to $1.27 by 1980. That means that gasoline nearly tripled in cost in just 10 years because of government intervention! $1.27 1980 cost of gasoline minus the $0.35 1970 price of gasoline and you get $0.92!

So who’s to blame for increasing costs? Go figure!

Its past time that you realize whenever government messes with something the effect is always the same. Look at the cost of a hospital room today…$1,500 - $2,500 per day. That’s a 9,275% increase over the last 40 years… on the low side! Holiday Inn room rates haven’t increased that much. But government intervention sure has changed the price of a hospital room with all its Medicare, Medicaid, HIPPA and Social Security regulations. Aren’t you just dying to see what Obamacare will do?

So what’s happening to your future right now? The truth is that you can’t work hard enough or long enough to offset the effects of government policies and regulations. The harder you work the more those policies will steal from you! The only way that you can possibly plan for your future and your retirement is to learn how to offset these dangerous policies with privatized banking.

That is what Prescription For Wealth is all about. If you haven’t read Prescription For Wealth contact our office and get your copy ASAP. Once you’ve read this book you’ll be ready to begin the process that will put you in charge of your financial future.

Stop complaining about all the disastrous things that government is doing to you and the havoc they are creating in your life because now you know WHY. Start today and begin applying the Prescription For Wealth now because human nature really does “have the uncanny habit of overcoming disaster” if you know what’s going on.

by Tomas McFie

Check out Dr. McFie's latest book: Prescription For Wealth

[i] As quoted by Chris Hunt