The Effect of Gas Prices on the Economy

The USA consumes 400 million gallons of gasoline every day. This with the burgeoning demand from developing nations such as China for gas, has pushed gas prices to record highs, Gas prices in the USA/Canada often vary significantly between gas stations and supermarket gas pumps. In many areas, gas prices can vary by 20-30 cents per gallon or maybe at times even more within a small area. High gas prices make people stop and think about their commute. This will affect the US economy by reducing value of properties in outer commuting zones around the cities, and depress rural property values. The effects of such big cost hikes will reduce available spending money for all those on average wages and below who need to travel significant distances in their cars, and this will further depress the US economy when this cash gets diverted away from a myriad of local spending decisions affecting local businesses from restaurants to children’s shoe shops.

Cars now are more fuel-efficient than they were in the 90s, so car owners can reduce your spending on gas by choosing fuel efficient vehicles. This is making US car manufacturers and car importers develop and extend their low fuel vehicle ranges. But, US car manufacturers have been slower than others, such as the Japanese marques, to develop some of the most innovatory fuel efficient vehicles such as the hybrid engine vehicles. This will tend to raise car imports to the detriment of the US economy until the US manufacturers catch-up. It is not all bad news though. Companies that own oilfield reserves will be seeing the value of their resources growing, and businesses that are connected with the renewable energy market are growing rapidly right across the range of renewable energy sources from wind, to thermal energy, and of course that most popular of renewable sources which is solar. Renewable energy companies are growing fast and employing increased numbers of staff.

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