Connect with us

Spread & Containment

Why Conversations About Money Are The Greatest Gifts.

I own the first edition of Works of Washington Irving (circa 1900), published by T.Y. Crowell & Co. One of my favorite essays inspired me to write why conversations about money are the greatest gifts.

An observation of the holiday (one of five),…

Published

on

I own the first edition of Works of Washington Irving (circa 1900), published by T.Y. Crowell & Co. One of my favorite essays inspired me to write why conversations about money are the greatest gifts.

An observation of the holiday (one of five), “Christmas,” is Irving’s initial reflection on the season.

An excerpt:

The dreariness and desolation of the landscape, the short gloomy days and darksome nights, while they circumscribe our wanderings, shut in our feelings also from rambling abroad, and make us more keenly disposed for the pleasures of the social circle. Our thoughts are more concentrated; our friendly sympathies more aroused. We feel more sensibly the charm of each other’s society and are brought more closely together by the dependence on each other for enjoyment. Heart calleth upon heart, and we draw our pleasures from the deep wells of loving-kindness which lie in the quiet recesses of our bosoms; and which, when reported to, furnish forth the pure element of domestic felicity.

Christmas opens a chasm in the heart. A warm vulnerability rises from within. The memories of holidays gone by, along with loved ones who have too, wrap us warmly in nostalgic mental snapshots of the past so vivid, we connect decidedly with our mortality.

It’s the season when we’re comfortable in our skin; we revel in the celebration of the present, knowing full well that our families will inevitably celebrate without us someday. However, our spirits, just like vintage ornaments that adorn a tree, will add sparkle to their eyes in the Christmas’ yet to come.

But how does one jumpstart the conversations about money? Here are a few ideas:

One: Clear, thoughtful communication is the key to conversations about money as the greatest gift.

This time of year, families are open to conversations about their legacy and risk intentions which means the subjects of passing wealth or protecting it are on the table along with the Christmas ham! But, unfortunately, handling these conversations about money can either tarnish or burnish memories.

Conversations about money can be the most incredible gifts or big lumps of communication coal!

For example, people who communicate openly, and are thoughtful in their estate or risk mitigation processes, allay ongoing family friction and animosity. The holidays take our guards down a bit. However, we must delicately handle the process. But what is delicate? Start with empathy.

Empathy is the ability to understand others. By placing yourself in another’s ‘shoes,’ conversations about money are less rough around the edges. Empathy throws a warm blanket over questions and their delivery. Since money is a delicate subject, empathy encourages a give and take, a kinder exploratory, and the conversation for some could be one of the greatest gifts of the holiday season.

Lack of empathy fuels regret.

A few years ago, an estranged son went home for Christmas. He didn’t know how he would be received; after all, the difference between seven years and a lifetime is as close as one warm memory or far apart as last harsh words spoken. So many things can change over time. Now a man, the boy felt small again as he knocked sheepishly and rang the front doorbell. No answer. After a couple of minutes, he breathed a sigh of relief and walked off the porch. Then he heard the creak of a door slowly open. Someone called his name. The tone of the voice was older, a bit raspy like it rose from a worn instrument, yet warmly familiar. A son rarely forgets a mother’s voice.

Ostensibly, the son discovered his father died a couple of years back. The man divulged that he found a journal after going through the belongings their son had left behind. He read it. The words allowed him to put himself in his son’s shoes at the time and how he always regretted not trying to understand.

I know this prodigal son. He regrets the lack of understanding of his father’s perspective to this day. Thankfully, he’s mended fences with his mother and brothers. As he told me: Sometimes empathy comes too late.

When it comes to conversations about money as gifts, make sure to wrap in the prettiest paper, fluffiest bow of empathy.

Two: Understand the back story to come from a place of empathy.

Everyone has a back story that drives behavior. When I build characters for movies and television, I carve, create, and ‘live’ character history and influences. I yearn to understand their childhoods based on specific personality traits I give them and then work backward. In writing, it’s called Circle of Being – those external or emotional moments that drive a person’s life and motivate actions. Most likely, these defining incidents occur at an early age – anywhere from 13-16 years of age.

Before you ask financial questions or look to share personal thoughts about legacy, know your audience. For example, if my goal is to leave my vintage G.I. Joe collection to my daughter instead of my son, best I explain to them my reasons, foster a conversation, and not let an estate planning document ‘speak’ for me after I’m gone. You laugh. However, I’ve witnessed siblings suffer irreparable rifts over toy collections, dishes, breakfast mugs (kid you not), old photographs, furniture, jewelry left to them (or not) through wills and other estate documents.

A personal example.

My grandparents experienced the Great Depression firsthand and remained excruciatingly frugal until death. Dad was part of the working poor and deprived of even the smallest of luxuries as a boy; my grandfather was emotionally cold, and my grandmother was the entrepreneur and breadwinner for the most part. So, except for his maternal grandmother, dad didn’t receive much affection to compensate for the lack of material goods. As a result, his Circle of Being was to never deprive himself of material goods, especially the expensive stuff. Ultimately, he was a terrible saver, a big spender, and lived only for the present due to his Circle of Being.

Even when I tried to approach the topic of money with him, he dismissed my questions as if I were the village idiot even though, strangely enough, he allowed me to invest for him. You just never questioned elders about financial matters in my family.

At Christmas, I strategically asked him questions, and he responded. To a point. He shared some information with me on his deathbed, but it was too late for any estate planning, including his wishes for a funeral. Thankfully, I had a few thousand dollars to provide a ceremony I believed he’d approve and a burial. Based on my knowledge of my father’s background, instead of feeling frustrated with how he handled things, I was able to walk in his shoes and appreciate him for who he was.

Frankly, dad’s spendthrift ways are the foundation for my Circle of Being. His fiscal recklessness motivated me to focus on fiscal responsibility and risk mitigation.

Whether asking questions or sharing about legacy requests, understand who you are too. Your tone, words, approach mean a lot. As Anton Chekov said – “Everything I know about human nature I learned from me.”

Three: Conversation starters are as easy as swallowing fruitcake from 1993.

Conversation starters aren’t easy, even if your empathy runneth over for the holidays. It doesn’t hurt to ask an independent, objective third party to facilitate. I don’t use ‘objective and independent’ lightly. Investigate thoroughly. Any financial advisor worth their value can assist. I’ve seen financial advisors, clergy; even dear friends help the ebb and flow of the conversation among family members.

Four: Frame questions properly to make sure conversations about money are the greatest gifts.

Closed-ended questions or those that begin with why won’t get you where you need to go. You want free flow responses, not what I call ‘answers with a verbal foot on the brake.’ For example, yes or no closed-end queries are dead ends. Questions that begin with why can sometimes sound defensive, combative, or just plain irritating. Remember when your kids asked why to everything? For the most patient of us, it was sort of cute. As adults, we learn to ask questions delicately to gather important information.

Five: Some creative conversation starters that can lead to questions about money as the greatest gifts.

Naturally, these ideas won’t be suitable for everyone but may suggest topics to tackle and frame them.

What do you wish you would have said to or asked granddad (grandma) before he (she) died?

Gee, I wish I knew where pops stored his essential documents, so I didn’t need to ransack the house at the worst time emotionally. I partner with clients who lost parents over a decade ago and abandoned investment and bank accounts still surface.

How do you think Snowy would feel if she were whisked off to an animal shelter if something happened to you?

I don’t mean to throw a pet in the line of fire; however, it’s an effective ice breaker. We love our pets and can’t imagine the horror of poor Puffy being carted away to an animal shelter. Frankly, I’m a passionate animal person, and sadly, I’ve experienced owners not communicating intentions for pets. However, placing a pet strategically into an estate conversation can break down walls and allow information to flow. Let’s not forget, Snowy and Puffy will be happy too!

Parents’ interment decisions are theirs, not yours.

Do you realize if you pass tomorrow, I have no idea whether you want to be cremated or buried?

We’re planning a coin toss, but you won’t care, right? Even parents who lament, ‘Oh, don’t fret over me, I don’t care what you do, I’ll be dead’ is sort of full of c*ap. They care. It’s their responsibility to provide instructions for others to respect.

What do you think I should do if I told you I had a month to live?

Here, you’re asking parents for guidance. It’s your job to steer the conversation to estate planning. What a way to make parents go all mushy inside! NOT MY BABY! If they start going on about how you should have a bucket list, get the conversation back to the tough stuff. You’ll then be able to ask the parents how they’ve prepared. It’s a long way around the subject, but ultimately, you’ll get where you need to be.

How would you feel about leaving me grandma’s diamond necklace?

Replace ‘diamond necklace’ with any heirloom you want. Then, deliver the line and be quiet. Maybe a couple of glasses of shared wine is a good idea before this query. The goal here is to jolt your parents to a response that will spark will and legacy intentions.

Tell me about the legacy you’d like to leave? Who would deliver a eulogy for you? Help me understand what you’d like us to share at your funeral? What is your preference for a cemetery?

Any question appropriately framed is on the table. I partnered with a client who made her burial arrangements and asked similar questions to her children. I plan the same in 2022 to relieve my daughter of those duties at a stressful time. It’s the ultimate token of love and respect for those left behind.

My personal experience.

Now, when I advised dad he needed a will, asked about life insurance, or became curious about how he was planning to fund retirement, I’d get the ‘look.’ Pop’s glare was well known by many. He was a tough dude who grew up on the streets of Bensonhurst, had his share of skirmishes in the Navy, wore a black leather jacket, and rode a motorcycle. Seemingly, my great-grandmother wasn’t a fan, so she tossed hot sauced meatballs at him at Sunday dinners (they were still good even after they hit their mark)! Consequently, I had to make his final arrangements hoping I did the right things.

Conversations as the greatest gifts because they allow you to share intentions, communicate final plans, share the reasons for the bequeath of personal items and sometimes, mend fences among family, clear up miscommunications and strengthen relationships.

A great writer of movie dialogue taught me how every spoken word in a script should weigh a thousand pounds. This advice goes for real life too.

A few basics to take to heart when considering conversations about money as the greatest gifts.

Communicate with your children and as soon as possible about money. Share successes and failures. Don’t make loved ones feel questions about money are off-limits or unacceptable – compliment inquisitiveness.

Understand you’re going to die someday; you’re not immortal. There’s a reason life insurance sales increased during the pandemic and are robust shortly after the holidays. Also, estate planning gets neglected because it’s not fun or comfortable to consider your demise. Make sure guardians are in place for minor children, health directives established, and wills complete and up to date.

Finally, there’s a simple tool available to have uncomfortable conversations with loved ones. It’s called Five Wishes. Go to www.agingwithdignity.org for a copy of this helpful guide. Of course, conversations about money are the greatest gifts. Overall, qualitative communication can lead to them.

Per the website: It’s more than just a document. Five Wishes is a complete approach to discussing and documenting your care and comfort choices. It’s about connecting families, communicating with healthcare providers, and showing your community what it means to care for another.

Five Wishes lets your family and doctors know:

Who would make difficult healthcare decisions when you can’t make them.

The kind of medical treatment you want or don’t want.

How comfortable you want to be.

How you want people to treat you.

What you want loved ones to know.

In several states, Five Wishes is a legally valid healthcare directive.

Questions lead to stories, which is why conversations about money (and everything) are the greatest gifts at Christmas.

Stories represent who we are. When we’re gone, they’re the only things left of who we were, like vintage, shiny ornaments. Every year, we unpack them; they breathe new life into us. They’re good things from the past forgotten most of the year.

Perhaps that’s why we’re so receptive to questions this time of year. Then, finally, they jumpstart discussions that cement peaceful legacies for the future.

Merry Christmas, everyone!

The post Why Conversations About Money Are The Greatest Gifts. appeared first on RIA.

Read More

Continue Reading

Government

Missouri Bill Prevents Doctors Being Disciplined If They Prescribe Ivermectin Or Hydroxychloroquine

Missouri Bill Prevents Doctors Being Disciplined If They Prescribe Ivermectin Or Hydroxychloroquine

Authored by Naveen Athrappully via The…

Published

on

Missouri Bill Prevents Doctors Being Disciplined If They Prescribe Ivermectin Or Hydroxychloroquine

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

Missouri lawmakers passed legislation that prevents state licensing boards from disciplining doctors who prescribe ivermectin and hydroxychloroquine.

Missouri Gov. Mike Parson signs a bill in Jefferson City, Mo., on May 24, 2019. (Summer Balentine/AP Photo)

Sponsored by Rep. Brenda Kay Shields (R-Mo.), HB 2149 also bars pharmacists from questioning doctors or disputing patients regarding the usage of such drugs and their efficacy.

With a convincing 130–4 vote in the House, HB 2149 passed both chambers on May 12 and currently heads to the office of Gov. Mike Parson to be potentially signed into law.

The board shall not deny, revoke, or suspend, or otherwise take any disciplinary action against, a certificate of registration or authority, permit, or license required by this chapter for any person due to the lawful dispensing, distributing, or selling of ivermectin tablets or hydroxychloroquine sulfate tablets for human use in accordance with prescriber directions,” reads the draft of the bill (pdf).

It adds, “A pharmacist shall not contact the prescribing physician or the patient to dispute the efficacy of ivermectin tablets or hydroxychloroquine sulfate tablets for human use unless the physician or patient inquires of the pharmacist about the efficacy of ivermectin tablets or hydroxychloroquine sulfate tablets.”

Critics of the bill have noted that the Food and Drug Administration (FDA) has not given approval for usage of the drugs. Ivermectin and hydroxychloroquine have been divisive drugs and politically polarized throughout the pandemic.

“But, nevertheless, the Missouri legislature has chosen to ‘own the libs’ by issuing a gag order against every pharmacist in this state from offering their medical opinion on taking either one of those medications—even if it could kill their patient,” wrote former Democratic nominee Lindsey Simmons in a May 12 Twitter post.

Although 22 countries across the world have approved the use of ivermectin in treating COVID-19, the FDA maintains that the current data show the drug to be ineffective. Large doses can be dangerous, it says.

A recent study published in the International Journal of Infectious Diseases analyzed a national federated database of adults that compared ivermectin with the FDA-approved COVID-19 medication, remdesivir.

After using propensity score matching and adjusting for potential confounders, ivermectin was associated with reduced mortality vs remdesivir,” researchers wrote. “To our knowledge, this is the largest association study of patients with COVID-19, mortality, and ivermectin.”

According to The Associated Press, Missouri state Rep. Patty Lewis, a Democrat, agreed to the bill to satisfy a group of conservatives in the Senate. She added that the bill will not change anything significantly as medical boards do not engage in punishing doctors who prescribe drugs legally.

Tyler Durden Wed, 05/18/2022 - 23:25

Read More

Continue Reading

Government

“They Shut Us Down”: Michigan Businesses Sue Whitmer For Losses Due To COVID Lockdowns

"They Shut Us Down": Michigan Businesses Sue Whitmer For Losses Due To COVID Lockdowns

Authored by Steven Kovac via The Epoch Times (emphasis…

Published

on

"They Shut Us Down": Michigan Businesses Sue Whitmer For Losses Due To COVID Lockdowns

Authored by Steven Kovac via The Epoch Times (emphasis ours),

A coalition of five bowling alleys and family entertainment centers is suing Michigan’s Gov. Gretchen Whitmer, a Democrat, for losses incurred due to her mandatory COVID-19 shutdowns in 2020.

Michigan Gov. Gretchen Whitmer listens to Democratic presidential candidate Sen. Kirsten Gillibrand (D-N.Y.) in Clawson, Mich., on March 18, 2019. (Paul Sancya/AP)

Michigan Dept. of Health and Human Services director Robert Gordon is also a defendant in the case.

The plaintiffs allege that the shutdowns imposed by Whitmer and Gordon were a “taking” of their businesses without just compensation in violation of both the state and the U.S. Constitution.

The case has been winding its way through the federal courts since January 2021.

Fred Kautz runs the lane oiler at Kautz Shore Lanes in Lexington, Mich., on May 13, 2022. (Steven Kovac/The Epoch Times)

The coalition lost the first round of the legal battle when the U.S. District Court for the Western District of Michigan ruled against it.

Oral arguments were recently held before a three-judge panel of the US Court of Appeals Sixth Circuit.

Plaintiff’s chief counsel David Kallman told The Epoch Times after the appeals court hearing, “The oral arguments from both sides were vigorous. The judges asked a lot of questions. It was the kind of proceeding that makes you proud to be a lawyer.

“Even the defense acknowledges that we are presenting ‘novel’ arguments.

“Michigan is the only state in the nation where a governor’s public health emergency powers were overturned as unconstitutional.

“If we lose in the court of appeals, we will take this case to the U.S. Supreme Court.”

Scott Bennett, executive director of the Independent Bowling and Entertainment Centers Association, told The Epoch Times,

“The governor’s actions were devastating to our industry.

“Things went from ‘two weeks to slow the spread’ to indefinite shutdowns.”

Bennett said that the forced closures were not based on solid scientific proof that bowling alleys and family entertainment centers would spread the virus any more than the Walmart stores or the GM plants that were allowed to remain open.

“They were allowed to operate with hundreds and even thousands of people in them but we had to shut down. We feel our industry was unfairly singled-out.

“We cannot stand for a repeat of such arbitrary treatment and don’t want the people of Michigan to forget what was done to them.”

With the recent uptick in COVID cases and the approaching mid-term elections, Bennett said his members that survived the 2020 shutdowns feel like it can happen all over again.

“It’s like operating day-to-day with a hammer held over your head. The uncertainty is altering business plans. The value of our businesses is dropping through the floor,” Bennett said.

Brian and Mindy Hill work the counter at their bowling alley in Imlay City, Mich. on May 13, 2022. (Steven Kovac/Epoch Times)

Fred Kautz, the proprietor of Kautz’s Shore Lanes in Lexington, Michigan, started working in the family business when he was 13.

The business has 12 bowling lanes, a bar, an arcade, a restaurant, and living quarters upstairs.

“We’ve owned this place for 42 years. For me and my family, it’s more than a place to work. It’s a way of life. And it has become an institution in our community—a real gathering place,” said Kautz.

He said he is still smarting from what happened after Whitmer’s executive actions were ruled unconstitutional by the Michigan Supreme Court in the fall of 2020.

“We got a little reprieve. We thought we were in the clear until she came back with another round of forced closures, this time under the authority of the Michigan Department of Public Health.

The first 30 days knocked us right on our butts. But we were willing to cooperate, to do our part. We were all scared and we did not want to see harm come to anybody.

We lost a lot of money at the time. We are coming back slowly, but our overall revenue is still down 20 percent from pre-pandemic days. That’s hard to make up.

“In the spring of 2020, I tried to do what was recommended and go along. Never again!

“If my Dad was still alive, he’d have never closed at all,” said Kautz.

Brian and Mindy Hill, owners of I.C. Strikes, a 16-lane bowling alley, bar, and snack bar in Imlay City said their business was hit hard by the shutdowns.

Brian was the town barber for 25 years, before purchasing the bowling alley where he learned to bowl as a child.

“We took over in December 2018. We’d saved up money to buy this place and make some upgrades. When COVID hit, we were forced to close down. It took all the money we saved for improvements just to survive,” said Brian.

The Hills said they never thought they’d see the day when their own government could do something like that to them.

Mary Bacon, assistant manager of Jump City, a family recreation center, cleans an arcade machine in Imlay City, Mich., on May 13, 2022. (Steven Kovac/The Epoch Times)

They shut us down. They took away our livelihood with no end date in sight. Then they wanted to loan us money. Think about that. They first put us in a situation where we had zero income to pay our previous debt. And then they wanted to loan us more money.

“Lots of small business people lost their businesses but kept their debt. It ruined them,” said Brian.

The Hills did apply for and receive a Small Business Administration loan at 3.25 percent interest for 30 years, and they participated in the Paycheck Protection Program which helped their business survive.

Up the road from the Hill’s bowling alley is Jump City, a large indoor recreation center offering an array of bouncy houses and arcade games for children.

Assistant manager Mary Bacon told The Epoch Times, “We lost a lot of business. We were forced to close for 15 months and had to make our payments with no income.”

Bacon remembers the morning of March 16, 2020, when many area businesses were gearing up for big St. Patrick’s Day celebrations.

“By afternoon everybody had to close. All that food went to waste.

“The shutdown was supposed to be for a couple of weeks. Nobody foresaw it would drag on for a year and three months.

“Oh, they said we could open again, but they so severely restricted the number of customers that we lost all of our big birthday parties. With so few kids allowed in, we couldn’t operate. We were losing too much money.”

Bacon said people are coming back to the center but are still scared, even though the games and bouncy houses are continuously cleaned and sanitized.

Navaeh Smalstig, 8, climbs out of a bouncy house at Jump City in Imlay City, Mich., on May 13, 2022. (Steven Kovac/The Epoch Times)

Before the pandemic, Danny Brown owned a roller rink in Grand Blanc and Owasso, two south-central Michigan towns.

“The lockdowns forced us to sell the Owasso rink for less than half of what we paid for it. We will be trying to make up our loss for years to come.”

Brown, who is a plaintiff in the lawsuit, told The Epoch Times, “To keep going I had to decide to triple our debt. Since the shutdown, I am three-quarters of a million dollars deeper in debt.

“Small businesses put everything on the line. All of our personal and family money. I am personally responsible for our debt. If I die my children will have to pay it.”

Brown said Michigan’s government acted without a real understanding and regarded the state’s small businesses as “nonessential throwaways.”

“One of the reasons we filed suit is to push the government to think differently,” he said.

According to Brown, family entertainment centers like skating rinks, bowling alleys, arcades, pool halls, miniature golf, and go-cart tracks have been nearly wiped out.

“A few years ago, there were 3,500 roller skating rinks in the United States. Now there are 700. There were five rinks in Genesee County, now there are two.” he said.

Brown attributes the decrease to years of ongoing government mandates and interference that led up to the COVID-19 lockdowns.

“They took, they stole our businesses!” he said.

Donn Slimmen, another plaintiff in the case, owns Spartan West Bowling in the west Michigan resort town of Ludington.

“The lockdown just about killed us. It was 14 to 15 months of agony. Our bank payments and utility bills didn’t stop. We went from being two to three months behind to more months behind.

“We entered into survival mode. We ate a lot of pork and beans and hotdogs. We’re still trying to work ourselves out of the hole. By the end of this summer, we might be solvent again.

“We were lucky to survive. We are still hanging on by threads,” said Slimmen.

Along with 16 bowling lanes, Slimmen operates a full-service restaurant.

It’s never come back. Pre-pandemic, we’d serve 200 customers at an ordinary Friday fish fry. Now our best night is 100.

“Our restaurant went from a thriving seated-guest business to a take-out operation grossing only two to three percent of the seated sales.

“We were spending $400 to take in proceeds of $100.

“The politicians and bureaucrats don’t understand. They never cleaned a toilet seat or climbed into a bowling machine to fix it,” said Slimmen.

Slimmen blames Gov.Gretchen Whitmer for the plight of his community and the state.

“You didn’t see Republican governors closing businesses. Their states did so much better.

“Drive through downtown Ludington or Muskegon and look at all the boarded-up storefronts. So many places are out of business. Michigan is in terrible shape,” Slimmen said.

The Tomassoni family has been in the bowling business for 84 years in the western Upper Peninsula town of Iron Mountain, Michigan.

We had to close bowling and our banquet facility a total of 161 days in two different periods of time in 2020. After the second shutdown, we could operate at 25 percent occupancy and only during restricted hours. No wedding receptions, no special events. It was a disaster.

“It ripped my heart out. I am so bitter towards my government,” said owner Pete Tomassoni.

Tomassoni’s business suffered further because of its proximity to Wisconsin which is only minutes away.

“Wisconsin closed for just 30 days. For the most part, they were wide open. That really hurt us.

“Our governor was picking and choosing which of our state’s businesses could operate. To force a business to close with no notice and without proven science is straight out wrong.

“I think that she came down so hard on small business because we, by and large, lean to the right.

“The state dangled the threat of yanking business licenses to keep people in line.

“Some of our businesses tried to defy the state and stayed open

Tyler Durden Wed, 05/18/2022 - 21:25

Read More

Continue Reading

Spread & Containment

Diesel Costs Deliver Body Blow To Trucking Industry, Impacting Broader Economy

Diesel Costs Deliver Body Blow To Trucking Industry, Impacting Broader Economy

By Noi Mahoney of Freightwaves

With diesel prices remaining…

Published

on

Diesel Costs Deliver Body Blow To Trucking Industry, Impacting Broader Economy

By Noi Mahoney of Freightwaves

With diesel prices remaining elevated — forcing significant costs onto shippers and trucking companies — the impact of fuel costs on inflation could put a dent in consumer spending, according to experts.

Diesel pump prices averaged $5.61 a gallon nationwide, 51% higher than diesel prices across the country in January

Economist Anirban Basu said the elevated price of diesel fuel damages the near-term U.S. economic outlook and “renders the chance of recession in 2023 much greater.”

“These high diesel prices mean that despite the Federal Reserve’s early stage efforts to curb inflationary pressures, for now, inflationary pressures will run rampant through the economy,” Basu, CEO of Baltimore-based Sage Policy Group, told FreightWaves. 

Earlier this month, the Federal Reserve announced a half-percentage-point increase in interest rates, the largest hike in over two decades. The U.S. inflation rate is at 8.3%, near 40-year highs.

Basu said consumer spending remains strong, even with elevated diesel prices, but that could change as shippers and trucking companies eventually must pass higher fuel costs on to the public. 

“One of the things we’ve been seeing in the U.S., particularly on the East Coast, is that diesel fuel inventories have been shrinking, which suggests that despite all this inflationary pressure, there’s still a lot of consumer activity, still lots of trucks on the road and the supply is unable to keep up with demand,” Basu said. “The higher price of diesel fuel will become embedded in the cost of everything consumers purchase.” 

Prices of fresh produce rising

Jordan DeWart, a managing director at RedWood Mexico, based in Laredo, Texas, said the types of consumer goods that could be immediately affected by higher diesel prices include fresh produce. Redwood Mexico is part of Chicago-based Redwood Logistics.

“With produce, that’s typically more in the spot rate business, and any of those smaller trucking companies are going to be heavily impacted by fuel costs,” DeWart said.

The U.S. imported more than $15 billion in fresh produce from Mexico in 2021, including avocados, tomatoes, grapes, bell peppers and strawberries, according to the U.S. Department of Agriculture.

“Everything coming northbound from Mexico through Laredo, the rates have been very sustained, but fuel prices keep going up, presumably with any differences being absorbed by the trucking companies in the spot market,” DeWart said. “When we talk to asset-based truckers, especially the smaller companies, they’re really feeling the pinch.”

It’s not only cross-border operators feeling the pinch. Growers and shippers in Texas’ Rio Grande Valley are also suffering because of increased fuel costs, said Dante Galeazzi, president of the Texas International Produce Association (TIPA).

“Our growers, shippers, importers, distributors … basically our entire supply chain has been and continues to be impacted by rising fuel costs,” Galeazzi told FreightWaves. “Between one-third to one-half of the costs for fresh produce is the logistics; you can see how quickly increases in that expense category can impact the base price.”

The Rio Grande Valley is the epicenter of the Lone Star State’s fresh produce industry, stretching across the southeastern tip of Texas along the U.S.-Mexico border. More than 35 types of fruits and vegetables are grown in the valley, which contributes more than $1 billion to the state economy annually.

“More concerning is that this wave of fuel increases is in line with the statistic that our industry is paying anywhere from 70% to 150% more year-over-year for OTR shipping,” Galeazzi said. 

TIPA, which is based in Mission, Texas, represents growers, domestic shippers, import shippers, specialty shippers, distributors and material and service providers. 

Right now, Rio Grande Valley growers and shippers are absorbing higher input costs instead of passing them on to consumers, but that could soon change, Galeazzi said.

“While the fresh fruit and vegetable industry continues to experience rising input costs across the board (seed, agrochemicals, labor, fuel, packaging, etc.), we have yet to experience sufficient upstream returns associated with those expense increases,” Galeazzi said. “Our industry is citing an 18% to 22% anecdotal increase to overhead costs. Meanwhile food inflation for fresh produce is hovering around 7%. That means the costs are slowly being felt by consumers, but it’s not yet at a commensurate level with input expenses.”

Diesel fuel prices at all time highs

The cost of diesel continues to soar across the country. Diesel pump prices averaged $5.61 a gallon nationwide, according to weekly data from the Energy Information Administration (EIA). That’s 51% higher than diesel prices nationwide in January. 

California averaged the highest fuel prices across the U.S., at $6 per gallon of gas and $6.56 per gallon for diesel, according to AAA. Diesel prices are also at an all-time high of $6.41 in New York.

The higher prices of diesel fuel and gasoline are being caused by a combination of factors, including surging demand and reduced refining capacity, along with the disruption to global markets caused by COVID-19, the current lockdown in China and the ongoing Russia-Ukraine conflict, said Rory Johnston, a managing director at Toronto-based research firm Price Street.

“The overarching oil market is feeling much tighter because of the Russian-Ukraine situation,” Johnston, also writer of the newsletter Commodity Context, told FreightWaves. “What we’ve seen is a larger immediate impact from the loss of Russian refined products; in addition to exporting millions and millions of barrels a day of crude oil, Russia also exported a lot of refined products, most notably middle distillates, like gasoline or diesel.”

Several refineries on the East Coast — including facilities in Newfoundland and Labrador, Canada — scaled back during the early days of the pandemic, which has hurt diesel capacity, Johnston said.

“There was also a refinery in Philadelphia that exploded just prior to the COVID-19 period starting,” Johnston said. “There’s not enough refining capacity on the global level, and particularly in the West right now and particularly in the northeastern U.S.”

He said he doesn’t foresee any relief from increasing diesel prices over the next few months or more.

“Things are going to be really tight for at least the next year, barring any kind of economic recession and some kind of demand slowdown materially,” Johnston said. 

DeWart said trucking companies that don’t have a fuel surcharge component or contract in place and are depending on spot rates could be in big trouble over the next several months as diesel prices either keep rising or stay higher than average. 

“Their fuel costs keep going up, but they’re really not able to negotiate higher rates right now with a really tight spot market,” DeWart said. “It’s really impacting small trucking companies, anyone that decided to kind of play the spot market, rather than being locked in contracted rates. They’re really feeling the pain right now.”

DeWart said for trucking companies, it’s critical to get some type of fuel reimbursement program in place “just to protect themselves in case the cost of fuel goes even higher.”

Tyler Durden Wed, 05/18/2022 - 19:25

Read More

Continue Reading

Trending