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Two weeks ago, the Iranians allegedly bombed Saudi oil facilities and put a big chunk of that country’s oil production offline. Also two weeks ago, the UAW went on strike against GM, our country’s largest auto manufacturer.
When I was growing up in the 60s and 70s, similar disruptions would have rocked our economy and been the dominant news stories for weeks. Check out this news clip from 1979 when the Middle East crisis de rigueur caused a gas shortage and New York State instituted odd-even gas rationing.
There were no 24/7 gas stations back then, so we would park the family car at the gas station queue the night before our designated gas-pump day. Then we would return to our car in the mourning just before the gas station opened. What fun!
But today, the Saudi oil attack and the GM strike were duly noted by our media and quickly supplanted by more pressing or titillating concerns. Our nation, in effect, collectively yawned.
And there’s a good reason why we collectively yawned: Middle East oil and GM cars just don’t matter as much as they used to. Consider the following:
- In 1977, we got 70 percent of our oil imports from OPEC. Today, we get a little over 30 percent. Saudi Arabia isn’t even close to being our largest supplier of imported oil. We currently get 43 percent of our imported oil from Canada. The Saudis supply nine percent of our imported oil.
- In 1979, the year I graduated high school, GM accounted for 45 percent of the U.S. auto sales. Today, GM accounts for 17 percent. In 1970, the last time the UAW struck against GM, 343,000 UAW workers refused to man the assembly lines. Today, 46,000 UAW workers are refusing to man the assembly lines.
The Personal Finance Angle
The world isn’t static. Human ingenuity can’t be bottled up by lobbyists and legislatures. In the 60s and 70s, few people at GM and the UAW appreciated the threat posed by Japanese carmakers. Up until a decade ago, few people in OPEC appreciated the threat posed by American hydraulic-frackers.
The personal finance angle regarding the above is clear. Disruption and obsolescence are a never-ending fact of the human condition. As such, you are best served with the following:
- Eliminate debt
- Have a healthy emergency fund
- Always be learning
Final Thoughts
Okay, groovy freedomist, that’s all I got. What say you? How does one stay safe and relevant in a dynamic world? Let me know what you think when you get a chance. Peace.
i recently “read” the audiobook “Good Profit” by one of the eeeeeeevil Koch brothers. In it he describes creative disruption and his company’s strategy of disrupting itself before any competitor can do so. the lesson i took is to look at how my income is generate and keep an eye out for any trends that’ll create opportunities/threats for it.
The wisdom of holding all my equity investments in index funds is that when Amazon disrupts K-Mart or Google disrupts IBM I’m cool b/c I have fractional ownership of both. All this disruption isn’t a zero-sum exchange b/c the efficiency of retail & computer business increases as the disrupters disrupt their markets.
If i were in more of a gambling turn of mind, I’d seek ownership positions in individual equities where I know enough to identify the scrappy little mammals who will soon be eating the dinosaurs’ lunches.
steve poling recently posted…Dave Ramsey Heresy
Oh, no, the “eeeeeevil Koch brothers”! Spot on, my friend. Couldn’t ask for better advice. Take stock of your biggest vulnerabilities and then act in ways that reduce those vulnerabilities. Love the way your mind works.
You just have to be flexible and adapt. The world will keep changing. If you can’t adapt, life will keep getting more difficult. Of course, a big nest egg will help.
We came a long way with the oil situation. That’s good news for American consumers.
Amen, my friend.
I remember well for the gas shortage back in my childhood. We had to stay in lines to get fuel tickets at a local office. Then you were able to go to the gas station and buy the amount your ticket offered. Needless to say, the gray market was blooming, fuel tickets were bought and sold, livelihoods were based on smuggling oil from abroad, etc. As far as I remember we have been entitled to enough fuel to go roughly 100 miles in a month. These day events like this may only raise gas prices a little bit. We raise an eyebrow and go on with our lives. Times change…
[HCF] recently posted…Financial Independence Europe Podcast Appearance
Wow! And we Americans thought we had it tough when the Middle East got extra volatile. Thanks for sharing, my friend. Your remembrances are a real eye-opener. Here’s one for you. I went to Buffalo University and it was a relatively short ride to Canada. When gas prices spiked to $1.50-$1.60 a gallon in 1981-82, it was still $0.80 a gallon in Canada. So all of my friends who had cars would go over the border once a week to gas up. How crazy is that!
Yeah, that was pretty much the process. I cannot remember the price difference but I guess it was significant. Diesel oil was the highest in demand as that was required for operating agriculture machinery. Folks who had diesel cars were crossing the borders of the neighboring countries, some multiple times (or multiple countries) a day. The developed the art of having just enough fuel in the tank to get to their destination to perfection. Also, it was a funny view when cars were filling to the fullest or sucking dry by using a jack to position the tank to the perfect angle to be able to reach the last drop 🙂 Crazy times indeed!
[HCF] recently posted…Financial Independence Europe Podcast Appearance