“You’re not going to like this”, said the bloke at my local farm supplies store.
The price of PVC pipes I need for the farm had just increased 40% across the board.
“Because of the rising cost of oil, which is a key component of the pipes”, he said.
“Well, they can stick that in their pipe and smoke it!” I said, like I was Tommy Tough Knuckles.
Silence.
He knew, and I knew, that I had zero choice but to cop it in the pole and pay up.
Welcome to the biggest oil shock in living memory.
Everything on the farm is more expensive. Which means tonight’s dinner was likely grown by someone with a maxed-out overdraft and a diesel bill that makes your eyes water.
“It’s still possible that if the Middle East conflict resolves everything will turn out okay”, said Reserve Bank Governor Michele Bullock last month.
Sure.
And it’s also possible my kids will remember Mother’s Day is coming up and they’ll buy a present, wrap it, and make a cute card, ahead of time.
But it’s unlikely.
I’m much more certain that the people in charge are making it up as they go along … which is why “they’ll sort it out” is not currently in my investment strategy.
It’s clear that Donald Trump has no idea how to get the Strait open. He’s sent a barrage of angry tweets, threatened to wipe them off the map, and the Iranians have been like, “LOL”.
It’s also very clear that our government is about as prepared as my kids on Mother’s Day morning. They went from assuring us we had plenty of fuel reserves to Albo flying around Asia with a jerrycan begging our poorer neighbours for a day’s worth of fuel.
The only politician I ever truly trusted was my dear old mate, former Deputy Prime Minister Tim Fischer. I remember he once leaned over to me and said:
“Scott, the entire world is only three meals away from World War Three.”
He was being deliberately provocative. But his point was dead serious: food security, like cheap petrol and toilet paper, is something we take completely for granted … until Bryan posts on Facebook:
“I’m a stockpilin’!”
Right now, fuel and fertiliser costs are pushing the price of nearly everything higher.
And when inflation climbs above 3% the Reserve Bank lifts rates.
Their aim is to slap the economy in the face – to slow things down by making your mortgage so uncomfortable you cancel Netflix and rediscover the true horror of free-to-air television.
But here’s the problem: even stripping out fuel and food, inflation is already running above 3%.
So brace for a slap. Probably several. Think of it as an episode of MAFS, except the contestants all bought their homes on Albo’s 5% deposit scheme.
Now things could ease, if the Middle East settles down. Maybe.
Yet here’s the principle I keep coming back to, the one that has never once done me wrong: “Hope for the best. Plan for the worst.”
What does that mean right now?
Sit down this weekend and ask yourself: if my mortgage rate went up another 1.5%, and my groceries cost another $200 a month, could I handle it? If yes, sleep easy. If no, go to your bathroom and dust off an unread copy of The Barefoot Investor.
And what if it all blows over?
Well, I called my supplier to ask if the pipe prices would be coming back down.
He just laughed at me.
“That’s a pipe dream.”
Tread Your Own Path!