Monday, February 20, 2012
Gas Prices, Mr. Kern... Gas Prices
Referring back to one of my earlier blogs, I said that the U.S. economy could only be stimulated and successful if the American people have money to spend. So, with a huge rise in gas prices expected, that's taking more and more money out of people's pockets. Now a days, there is so much commuting and jobs where people have to drive, that it's almost impossible to go even a day without a car. Since gas is so expensive, people are going to be cutting off on other kinds of spending because they have to save money for gas. This can lead to a huge decline in the U.S.'s economic growth. High crude oil prices and the threat of Iran to cut off oil exports can cause some refineries to close down during the spring, which sends gas prices even higher! Because it is almost impossible for people not to drive, the high prices are just going to throw people's income into gas instead of other markets. Therefore, it will make the economy decline.
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2 comments:
Scott, you bring up many valid points. I think you are absolutely spot-on about the economy declining when people's money are going into the gas tank instead of other markets. Not only are more and more people spending less because of the increase in gas prices, but they are also spending less because of the burdensome taxes that the Federal Government has set. In order to stimulate the economy, the Fed needs to stop spending grotesque amounts of money and put it back into the consumers pocket.
If gas prices get high enough won't that make "new energy" companies start up to meet the demand?
Wouldn't that then create more jobs and lead to further innovation?
Currently hybrid cars and other alternative energy solutions are not cost effective since we can still get by on oil based solutions. However, if oil becomes more expensive than it would be more economical to explore "new energy"
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