Most people are amazed to discover the enormous amount of energy contained in a gallon of gasoline. However, this isn’t surprising because the public seems to take for granted the ENERGY that drives the entire economy, especially oil. And, oil is the most crucial energy supply vital for our Just-In-Time-Inventory-Supply-Chain System. Without oil, the entire global economy would grind to a halt.
In my recent video, The Tremendous Hidden Value In Every Silver Coin, I discussed why the precious metals act as a store of “Energy Equivalent Value.” While many people may disagree with this analysis, our complex economy is nothing more than the trading of energy, in one form (goods) or another (services).
Here’s an example. Skechers USA, which sells footwear, enjoyed a 7% margin of profit in the first three quarters of 2019. The company reported $287 million of net income on $3,889 million in revenues. Thus, the total cost of Skecher’s footwear was 93%. While the public is purchasing shoes made by Skechers, I can assure you that the overwhelming majority of the cost was associated with the ENERGY consumed in the entire process. Energy also includes the amount of Human Labor, Materials, Capital Expenditure, etc. Why? Because the materials used in Skecher’s shoes were a result of the tremendous amount of energy in all forms and stages in the manufacture of the materials.
So, when someone plops down $75 to purchase a pair of shoes, the overwhelming majority of that price is a result of all the ENERGY consumed in all forms and all stages. Thus, our ECONOMY is nothing more than the trading of energy… that ends up in one form (goods) or another (services).