Saturday, November 1, 2008

Not Worried Enough? Try This!

No, I am not going to talk about the economy. Or the stock market. What’s happened there is something that is too late to prepare for. We’re “there.” Let’s turn our focus to the future. Maybe if we peer very carefully into our crystal ball we can get a glimpse of coming attractions that will help us prepare for them. Kind of along the lines of “the early bird gets the worm,” or “a stitch in time saves nine.” A bit of research now could save you from walking off a cliff later!

You may have been noticing more talk about “peak oil” in the past year. Probably not recently, since all eyes have been on the disastrous economy, but certainly when oil was spiking up to close to $150. Lately, with prices down in the 60’s, it might seem like old news, gas prices have dropped, lots of experts blamed the price surge on speculators and we can go back to business as usual. What if those experts were wrong? After all, did any of them predict the “Blacktober” stock market debacle?

My daughter’s an ice hockey defenseman, and when I coached her I used to tell her “keep your head on a swivel.” That’s the same advice I’d give to today’s entrepreneurs! You’ve always got to be on the lookout for the next trend…good or bad. When you run your own business something’s always being tossed at you. Sometimes you catch it, sometimes you duck, and sometimes it smacks you in the head. In a great economy, it may have been mostly marshmallows flying at you, times were good, so if you got smacked by a few it didn’t matter. Nowadays though, hockey pucks and bowling balls are flying, and you don’t want to get winged by one of those babies! Rising oil prices could well be one of those nasty surprises.

Here’s a very important point: rising oil affects more than gas prices. It raises the cost of nearly everything in our country. Food (mechanized factory farms use petroleum-powered machinery, pesticides are petroleum-based, crops are transported using fuel, etc.), medicines, health care, every good shipped from overseas, anything plastic, the list goes on and on.

Quick background. Basically, “peak oil” doesn’t mean no oil…it just means the point at which we have used up half of all our existing oil supplies. Big deal you may think. We still have the other half. Here’s the rub: think about the phrase “low-hanging fruit.” It’s always easier and cheaper to harvest the apples that are closest to the ground. To get the higher fruit you need ladders, etc. and it costs more. That’s the problem with oil…the second half will be much more expensive to get out of the ground. Naturally, oil gets more expensive. I’m no expert, here’s a link to a site that will tell you more than you probably want to know!

Most of the mainstream doesn’t buy into peak oil. I leave you to do your own research. The point is, it’s a good idea to consider the issue. Whether oil prices slide lower or skyrocket, it’s going to affect your business. It will affect your raw material prices, transportation, shipping, utilities, etc. It will also impact your customer’s ability to purchase your products or services. If you see a trend coming, you can adjust and tweak your business plan to take advantage. The more you know, the more prepared you will be to dodge flying pucks!

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