3/29/2005

Oil prices ripple through the economy

In the article oil prices spread ,the point is brought out about how there is a ripple effect happening to the economy due to the rising prices of gas. Many businesses depend on the use of gas to stay in business; therefore a business has to pay more for the gas to get the job done which has the affect of making their customer’s price for the product or service even more expensive. When one looks at it from this perspective people are getting hit twice when it comes to the pocketbook which includes once at the pump and again on any service that would take gas which could even mean buying something off the internet and having it shipped to them or having a pizza delivered. The article brings out there has not been that big of an impact on the economy because of absorption, but what is the long term effects if the price keeps going up? Will it slow the growth of the economy?

1 comment:

Dr. Tufte said...

This hasn't had a big effect on our lives because - unlike past run-ups in the price of gas - this one is being driven by demand. We want the stuff, and therefore are willing to pay more for the gas to get it. We're not being seriously "harmed" because we're not having the price forced up for reasons beyond our control.

One other thing to keep in mind is that the macroeconomy depends much less on oil than it did a generation ago.