Is the skyrocketing price of gasoline one of if the not THE major cause of the current recession?
And is it not responsible for the economic downturn we are experiencing now?
I think that this is a factor, but the economy is so complicated I don't think it's the major cause. I'm not sure what is, but I know I don't like to pay $4 a gallon just to get to work!
Gasoline has been expensive for awhile. Characterizing it as skyrocketing isn't accurate. IMHO, things that have much more to do with the deficit are the unemployment rate and the housing crisis. As job creation continues to increase, we will come out of the recession, albeit slowly. This is the reason two consecutive presidential administrations have used stimulus fund to try to stimulate job creation. Dumping money into the economy can create a ripple effect in the job market.
Gasoline is a major contributing factor to nearly everything we do in America. All types of goods and supplies have to be transported to somewhere, workers have to drive or ride a bus , very few walk or ride bikes compared to the number that drive, food has to be shipped for processing and packaging then sent to warehouse to finally be transported to the stores. Gas is a major factor in the economy - not the only factor but definitely a major one.
short answer,........... yes.
longer answer,.... yes, yes & yes.
the price of fuel jacking through the ceiling was THE trigger for the entire economic melt down,.... the housing buble was very real,.... but it was the cost of fuel that popped it,.... families found themselves spending thier house payment money on thier fuel to get to work,... so they lost thier houses,.. thus begining the realestate crash,... buisness modles began to crumble under the new rising cost of transportation,.. so cost cutting meant jobs cutting so people lost jobs,... then lost thier houses,... blow #2 to the housing market,.... the rising cost of freight was tranfered to EVERY SINGLE THING WE BUY, groceries, dry goods, on and on,..... this all trandfered to wall street,..... as buisness modles crumbled under the weight of fuel prices, the stock market tanked,.... as banks absorbed more and more failed loans the banking industry crumbled,...
yup,.... in a nut shell,............... the catch phrase of our generation is not "its the economy stupid" as it was in the 90's,..... it is now "its energy stupid"
Higher Fuel prices is in not helpful...Yet it is a tough case to make it the cause. In a sense the recession has kept fuel prices high. The lack of economic activity has forced the Fed to monetize so much debt that it weakened the dollar further. Since Oil is priced and traded in US dollars, the weakend currency has driven up oil prices along with most commodities.
The trade off is that with any major sustained economic expansion the increased global consumption will also drive up prices. Some of this is the result of Opec's manipulation of the supply brought to the market. But it also has to do with our own unwillingness in the US to use our own resources.
The new discovery in the Dakota's will bring more energy to the market by 2013 than the entire state of Alaska. However, since there is no pipeline in place all the product must be loaded onto freight cars and trucks to deliver to refineries. That makes it an incredibly expensive venture and doesn't have the desired impact on prices.
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