Economic Impact Of High Gas Prices Essay
, Research Paper
Gas monetary values are up over 40 cents a gallon from this clip last twelvemonth ( Stefanova ) . What impacts will that hold on the overall economic system? A recent USA Today canvass showed that 55 per centum of people who make under $ 20,000 a twelvemonth consider gas hikes a fiscal adversity. Merely 30 per centum of people who make $ 50,000 a twelvemonth called the additions a adversity ( Regan ) . If the recent gas monetary value additions reflect the province of the economic system in the late 1970 s, with lines at the pump and rising prices, do non worry excessively much.
The United States is non as dependant on rough oil as it used to be in the 1970 s ( Regan ) . As a consequence, the United States will non confront such an economic daze as it did when gas monetary values skyrocketed in the late 1970 s. In the 1970 s, energy accounted for 8.7 per centum of every dollar in the gross domestic merchandise compared to 3 per centum today. But, merely because the United States lost some of its dependance on petroleum oil, does non intend that higher monetary values at the pump will non impact the state.
The state is at an economic high, but high gasolene monetary values can stifle these roar times. Consumers pay more at the food market shop, the hardware shop, and the cab to acquire where
they need to go. A certain taxi company in Texarkana, Ark. has not increased taxi fares in 13 years, but that will now change because of the huge dent in company profit (Associated Press 03 18, 2000). Taxicab companies, with approval, will start implementing a $1 surcharge to cover the abnormal gas prices. Airline industries are also implementing a $20 surcharge because of the artificially high fuel prices. Shipping companies are charging retail companies more for the shipping. As a result, the increased costs are passed on to the consumer. To make matters worse the higher gas prices cut into consumers’ spending budget. Consumers are skipping the whole shopping bit, to avoid driving. In 1997 Vice-President Al Gore negotiated a global warming treaty in Kyoto, Japan that would require the U.S. to cut its greenhouse emission to 7 percent below 1990 levels by 2012. Since emissions are about 10 percent higher than they were in 1990, compliance with the Kyoto agreement would require massive reductions in fuel usage. If this becomes law the result would be astronomical gas prices (Sanders). These high prices can lead to inflation and inflation results in slow economic growth (Price).