Bad news on the price of tools. (morphing into OT)

[Greg Peterson]

... factor in the fact that (I believe) we are the only nation in the world that makes it illegal to go after our own natural resources… the only one. Russia is cutting taxes for their oil companies so that they can explore for more resources, while we are threatening to socialize our oil companies and forbidding them from exploring here. John McCain said he’d no more want to drill in ANWAR than he’d drill in the Grand Canyon. I’d drill in my back yard if it meant lower gas prices. (Disclaimer note: I personally work on drilling rigs so I wouldn’t mind seeing more drilling anywhere)

We do have more coal than Saudi has oil. We also have more total oil than Saudi between North Dakota, Colorado, ANWAR, Gulf of Mexico, Atlantic Shelf and Pacific Shelf. China is drilling… right now… 90 miles off of Florida’s coast when we can’t.

Brad, there is one fatal flaw in the argument that if we could just drill in ANWAR. In a nutshell, ANWAR oil would be sold on the international market.

Senator Ted Stevens from Alaska asked the CBO to do a study about how much ANWAR oil would reduce the cost of gasoline for Americans. Best case scenario would be about .02¢ / gallon.

Even if we started pumping oil out of ANWAR and Florida, the output would not be enough to outpace demand. Besides, the oil companies, just like OPEC, would keep a pretty tight reign on the supply. Demand hasn't curtailed all that much. Much as I hate to say it, until consumers lower their gasoline consumption, why would the oil companies want to lower the cost? People are still buying it like it's going out of style compared to most other countries.


Oil, steel, copper, concrete and so on are hot commodities these days. Demand is high, supply is low.

I expect tools prices will be going up across the board. I'd be surprised if they didn't go up.

[Ken Fitzgerald]

I'm going to caution everyone. Political discussions are not allowed at SMC as per the TOSs. This thread is drifting that way and has already gone WAY OFF TOPIC and is becoming political.

[Lewis Cobb]

Back to the price of tools - - I was going to pop this question up in another thread, but figured it fits in here just as well.

Is it just me or did the price of Powermatic's 14" bandsaw just jump about 20 % ?

I placed an order for one before the promotion with the free riser block expired. The price was 899. in the flyer, and amazon had it listed for the same price. I just looked at amazon yesterday and their price for the saw is now 1070.00 Well, ok, that's technically 19 % but still - seems like the rising prices have already arrived.

If you factor in the free riser block that amazon has listed for 86.70, the difference from the promotion price that just ended to amazon's price today is a whopping 29 %

Now that's a tad more than inflation don't you think? Maybe I am missing something here...I'd like to think so, but it does not look good from my seat....

[Greg Peterson]

Inflation doesn't apply at the micro level. I suspect there are costs unique to the manufacturing/shipping/distribution channels that are largely responsible for this increase.

[Chris McDowell]

I'm not political but I do have a unique understanding, I believe, of much of the price increases. It's simple, higher fuel costs affect everything. Eighty percent of all town in the USA do not have rail service. Therefore the vast majority of product moved in this country is on trucks.
My family owns a small fleet of trucks and I can tell you a transport of fuel that used to cost $7,200 now costs over $38,000. It costs trucks almost one dollar per mile just for fuel costs alone. So the next time you are at the grocery store , Wal-mart, or Woodcraft, realize nearly everything you see has been transported by a truck somewhere along the way.
A transportation crisis is ongoing in the country. By the end of the year experts predict 10% of commercial trucks that began the year 2008 will be off the road by 2009. It's not reported on the news and not really talked about in the mainstream, but I can promise all of you are paying extra for transportation of every product. And if the number of trucks running continues to fall at this rate, you haven't seen anything yet.

[Greg Peterson]

Among some of my duties, I manage a small delivery fleet of Toyota pickups. We have 23 of these trucks, ranging from 1997 to 2008. The 1997 model has over 500K on the original engine and transmission. Runs like a top, purrs like a kitten and all I've done is tune it up, and change the oil and filters. Great running machines.

I was logging gas receipts this afternoon. Between yesterday and today we have spent over $1,600 in gas. What we now spend in four days equals what we spent in four weeks eight years ago.

I think by the time we really start to feel the pinch, the rising price of tools will be the least of our concerns.

[Bruce Benjamin]

I was logging gas receipts this afternoon. Between yesterday and today we have spent over $1,600 in gas. What we now spend in four days equals what we spent in four weeks eight years ago.

Well that either means that you have much more business than you did 8 years ago, (that's good, right?) or that 8 years ago you were only paying about 60 cents a gallon for gas.

Bruce

[Greg Peterson]

Actually, seven years ago we were paying $1.05 to $1.20 per gallon, depending on location. So, in seven years our fuels costs have more than tripled and are closing in a quadrupling. Other folks likely experienced different costs in their region, then and now.

No matter how one slices it or nitpicks, fuel costs have skyrocketed. Just a matter of time until the rising costs can no longer be absorbed and consumer prices will go up. Unless the bottom drops out of the oil industry. One scenario seems more likely than the other.

Hobbyist make up a respectably large contingency in the wood working tools market. I may be stretching a bit here, but I'm going to suggest that the average hobbyist funds their wood working hobby/habit via discretionary funds. And discretionary funds always seem to be the first thing that gets shrunk when personal finances are subjected to even the slightest stress.

How tool manufacturers respond to rising costs and keep hobbyists buying their tools will be a big challenge.

[Chris Padilla]

Pricing a product to sell it is always a tricky proposition! Too high, no buyers, too low, run out of supply or don't make enough money....

[Rich Konopka]

I'm hoping $4 gas forces the alternative energy spark...forces Detroit to stop churning out 10 mpg vehicles...forces better energy use...forces us out of our cars a bit....

Chris,

It is going to take a while for us to give up or get out of our cars. There is very little mass transit in this country and the country is dependent on cars and commuting long distances to work.

[Joe Chritz]

Sorry, Dave used the term "marginal cost" and I'm afraid I was stimulated to a Pavlovian response.

I have had my share of Pavlovian drool fests but not usually at an economic discussion.

Nothing can by itself cause wide spread inflation or economic collapse. Fuel happens to be a constant that everyone needs in some amount or other so it seems to have a large effect then it probably really does.

Only if alternative energy is cheaper, substantially so, will it really have any impact.

Vehicle fuel has so many problems with transitioning from oil to alternative it may be a fair while before any major change is seen. There are some very cool new techs being developed. I just hope they see fruition before I have to turn in my company car and gas card.

Joe

[Steven Hardy]

Some of you guys sound so pessimistic!!!!
Sad!
http://www.manufacturing.net/News-US...itiveness.aspx

[Greg Peterson]

Rising tides do not raise all boats equally.

The nearby tool shop's business is doing okay, not up, not down. Most of their customers are industrial/utility workers. The shops that sell mainly to construction workers are way down though.

Not all segments of the tool market are off. Perhaps some of the tool manufacturers that are more diversified than say Steel City will have some latitude. Saw Stop and Steel City come to mind as companies that have a pretty limited segment.

[Steve Schoene]

[quote=Brad Knight;865137]
Then factor in the fact that (I believe) we are the only nation in the world that makes it illegal to go after our own natural resources… the only one.

Whoa, Well over half of the world's oil is produced by government controlled, and increasingly government run, oil companies. Governments around the world take a MUCH greater role in determining where and how much oil will be produced than in the US.

... while we are threatening to socialize our oil companies and forbidding them from exploring here.

Sure if you count Maxine Waters as constituting a meaningful threat. Otherwise nationalizing the oil companies in the US is a non-issue with no significant advocacy. This is not Venezuala.

We have to prove that we’re willing to be ‘players’ in the market instead of simply consumers. We can do that. We can do that quickly. As soon as other oil producing nations realize that there will be more competition for their product… prices will drop.

Crude oil is already bought and sold in a world wide market. The contribution of perhaps 2 mm barrels a day additional oil from ANWR would have an impact, but that impact would have to be considered in the context of world production in the order of 85 million barrels a day.