How Will Gas Prices Effect The Economy

[.X.]

With gasoline prices breaking the $3 mark in US,How will this effect economy? Consider all aspects.All your food and products you buy are a shipped into the market place via vehicle or airplane.These companies can only obsorbe these losses for so long before all your grocery products,Virtualy everthing will go up in price to accomadate these high fuel prices.A loaf of bread $4?? It's coming imo.I know alot people here would like to say GWB is the cause of this.NOT TRUE! It is the petrolium industry that raises gas prices,Not the government.The huge rise in fuel prices actually have the power to completly take our economy down imo.People that i have seen on TV reaction to this fuel hike are simply saying." I have to drive..so i will pay the high prices,But i have yet to hear one person acknowledge the enormous effects this will have on the economy.What do think??

 

[Zeeble]

LOL, this makes me laugh. Your breaking $3 per gallon, and we are breaking £1 per LITRE! Thats almost $9 per Gallon!.

Anyway, I read an interesting article in the FT regarding this issue. It appears the a hike in prices is not going to have an adverse affect on the economy. Perhaps the only problem would be inflation which would force an increase in interest rates, which is not good as the inflation would not be reflecting the economic conditions as a whole.

 

[stscac]

I voted, and It looks as if I am the first to do so.

I think that oil runs everything here. People with SUV's are smashing their heads on the bumper for buying one...

I'm glad I am at college now so I am not driving too too much

-Steve

 

[.X.]

LOL, this makes me laugh. Your breaking $3 per gallon, and we are breaking £1 per LITRE! Thats almost $9 per Gallon!.

Anyway, I read an interesting article in the FT regarding this issue. It appears the a hike in prices is not going to have an adverse affect on the economy. Perhaps the only problem would be inflation which would force an increase in interest rates, which is not good as the inflation would not be reflecting the economic conditions as a whole.

er....Inflation and high interest rates are the economy,Food goes up 3 fold,Housing interest rates rise to 13% ,,But work wages stay the same??
What am i missing??? As well a petrolium is used in plastics and ect.50% of the US petrolium is said to go else where other than fuel.

 

[PolurNET]

In canada, it's up to $1.50/Litre in major metropolitain areas like Montreal & Toronto.

Just a year or two ago, it was around 60 cents/Litre!

 

[monRa]

more than 1 euro hear in greece, greek economy is not bretahing well, just go ina supermarket and you will see

 

[Brian]

Gas prices will hve a huge effect on the economy. With higher gas prices , it makes it costs more to go anywhere, even going to work. For travel destinations less people will be going there, which could lead to layoff's in those areas, the gas prices will trickle down and effect everyone, even those that do not drive.

 

[spy69]

Thats all true but i think in about 3 to 4 months things will become a bit more stable (hopefully) and gas price will drop to maybe $2.50.

Spy

 

[CrazyTech]

There is no doubt that gas has an effect on things. We'll definitely see some economic turbulence for a little. We're several years and possibly even decades behind where we could be with alternate energy (once again its one of those things that we put off for the next generation to deal with and now this generation is feeling it). Had oil not been on the rise so much I daresay the economy would be 11k+.

However, I do believe that ultimately we'll be used to this and eventually it won't affect things that much. As we use alternate fuels and become more efficient then demand will drop. I think ultimately in the next year or so the market will react less and less to prices.

 

[gchick]

i believe it'll widely affect the economy. just recently, fare hike was increased by 2% and the electricity also incrased by 4%. now i fera that maybe in the next coming years, we'll just be depending on stronger countries just because we barely have enough "something" to hold on to our country. and what's worst is the political crisis is included for the people to shoulder.

 

[Humdizzy]

The same thing happened a couple of decades ago and the gas eventually went down. I think it was the 70's. People are just dealing with it.

 

[Zeeble]

er....Inflation and high interest rates are the economy,Food goes up 3 fold,Housing interest rates rise to 13% ,,But work wages stay the same??
What am i missing??? As well a petrolium is used in plastics and ect.50% of the US petrolium is said to go else where other than fuel.

Just tell me something. If high petrol prices are going to have such a HUGE affect on the conomy, why havn't they already?

Nothing will be so drastic as food prices going up by 300%, I think that 3-4% would be the top end. The petrol prices are driving inflation rates up by around 0.2% maximum, which can cause a small 0.25% increase in interest rates if the worst came to the worst. Which certainly does NOT mean 13% interest rates.

 

[Mark]

Just tell me something. If high petrol prices are going to have such a HUGE affect on the conomy, why havn't they already?

Nothing will be so drastic as food prices going up by 300%, I think that 3-4% would be the top end. The petrol prices are driving inflation rates up by around 0.2% maximum, which can cause a small 0.25% increase in interest rates if the worst came to the worst. Which certainly does NOT mean 13% interest rates.

You aren't here Colin .... It HAS already affected prices here in the US .... Building materials have gone up 25% already in my area and I'm +/- 1,000 miles from the Hard hit areas of the Disaster. My Buddies in the heavy construction business have had to add 70% to their prices on hauling Dirt/Rock/ and Asphalt due to Diesel Fuel prices ... and BTW - All asphalt and tar based products are processed with guess what ? - You got it - Petroleum products ...

As far as the prices of Fuel in the UK etc ... That has very little to do with the US - We are talking about a 50% + Jump over night in gasoline prices - Did yours do that ? Does 30% of the UK fuel supplies come through the Gulf Coast as well ? Don't think so ....

Xfactor is Right - Our Pay more than likely will not correct itself at all , whereas The cost of living has jumped through the roof in a matter of a week. I did notice a 20 cent drop overnight here on Regular Gasoline but that doesn't impress me much considering it is still a dollar over last weeks price :td:

 

[Zeeble]

You aren't here Colin .... It HAS already affected prices here in the US .... Building materials have gone up 25% already in my area and I'm +/- 1,000 miles from the Hard hit areas of the Disaster. My Buddies in the heavy construction business have had to add 70% to their prices on hauling Dirt/Rock/ and Asphalt due to Diesel Fuel prices ... and BTW - All asphalt and tar based products are processed with guess what ? - You got it - Petroleum products ...

As far as the prices of Fuel in the UK etc ... That has very little to do with the US - We are talking about a 50% + Jump over night in gasoline prices - Did yours do that ? Does 30% of the UK fuel supplies come through the Gulf Coast as well ? Don't think so ....

Xfactor is Right - Our Pay more than likely will not correct itself at all , whereas The cost of living has jumped through the roof in a matter of a week. I did notice a 20 cent drop overnight here on Regular Gasoline but that doesn't impress me much considering it is still a dollar over last weeks price :td:

You are right in saying that petrol prices have had an affect on SOME industries. But the overall affect on inflation really won't be more than 1%.

The UK has seen an increase of at least 20% on petrol prices over the last few months, so we know what its like. And to be honest, it hasn't really had any affect apart from the fact that its slightly more expensive to drive. Obviously there was a small rise in inflation (I say small by 0.25% is pretty major), which has resulted in the BoE not being able to drop interest rates twice.

I would say that the cost of building supplies has gone up by 70% mainly due to short supply after the hurricane rather than oil prices. And to say that a 50% increase in petrol prices has resulted in a 70% rise in material costs just cannot be correct.

 

[adam_uk]

my server bills are going to look prety healthy next month to be honest. pound - dollor rate has shot up

 

[Mark]

Okay - Now take that 20% hike over several months (Which weve got as well) - and add 50% more to it today ~ I'd say that the majority of even our so called "Middle Class" citizens are living from paycheck to paycheck now ... any added cost Hurts a lot

I should make it more clear that The "Building Materials" I'm speaking of aren't all the type for building houses either .... I'm also speaking of Iron/Steel/and plastics of all kinds used in heavy construction as well - Pipe materials for Water and Sewer utilities etc ...

If it cost 50% more to transport something ... it really will affect it more than most people think ATM. I know it depends on the cost of the Item being shipped to begin with as well - But smaller items such as Groceries etc ... Will rise a lot more than just a few percent IMO ~

I guess we'll just have to wait and see -

 

[jamx551]

I guess the government should now call for citizens to use manual transportation like bicycles... :D

 

[Zeeble]

People here are also affected. People here also live from paycheque to paycheque.

Iron, Steel etc has seen a massive rise in costs due to the rapid development of the Chinese and Indian economy. The amount in the first place to transport the goods would have been fairly small as it would have been spread out over large amounts.
If you also think, how much food a supermarket transports in one go, the extra cost would be spread out over all of the goods. Competition will most likely stop supermarkets from raising prices by the extra half a cent.

I just hope that the petrol prices will stabilise but there is little chance of that now after the hurricane. Imagine if you guys in the US had to pay $1 per litre....thats the equivalent of us paying £1 per litre. A large amount, and as you can imagine it really is difficult for poorer people here too.

Adam, I have to agree. And I am quite happy. Back to £1:$1.84 today. Dollar grew weak mainly due to Katrina I would say.

 

[movingconcierge]

Try moving interstate in the US and you'll pay 13% extra just in fuel as of today. By the end of the week, it will probably be closer to 16%...

We're being groomed for higher gas prices...I'm sure that a station posting $2.40-50 / gallon in the LA, CA area would cause mass media coverage.

Since my industry is so closely tied to fuel (and real estate) I can say that the fuel prices are going to have an ever increasing impact on my economy, in my little world...

 

[Lyte]

They economy can not help but be effected. Nothing is moved without gasoline so if we want product moved from A to B it's going to cost more.