Why Gas Prices are Killing the Economy
I'm sure it's not the only reason, but certainly with gas prices approaching the $4 a gallon mark here in Wisconsin (I can only imagine that price in California), the exploding gas prices are playing a big part in the downturn of the economy here in America. And I'm gonna throw out some numbers in the following paragraphs that are going to make you agree.
I track all the money I spend each month, maybe that's a little anal of me but I find it's the only way I get avoid spending a ton of money on random things and not realize it. If I see what I spend each month, that horrific final total keeps me grounded. Anyways, my last month's total spent on gas approached the $400 range. Now I most certainly wouldn't have spent all that $400 on goods/services, but I would have spent some of it buying goods and I would have put the rest in the bank (which in turn they would use to pump more money into the stock market). It would have been a win/win for everyone involved.
That was my personal experience, but now let's play with some numbers to see what this means big picture. The average American drives about 15,000 miles per year though I have heard as high as 20,000 miles per year (we'll conservatively use the earlier for these examples, not because we like conservatism but because large numbers frighten me). At $4 a gallon for gas and getting 25 mpg (which is certainly much more than the SUV loving America gets), that amounts to $200 a month.
For people who love math (you're sick might I add):
15,000 / 12 = 1250 miles per month
1,250/25 = 50 gallons of gas per month
50 * $4 = $200 a month
Ten years ago, gas was going for $1.24 a gallon, amounting to $62 a month. This time last year gas was at $3.19 a gallon, or $159.50 a month. Some analysts are predicting that gas could go as high as $10 per gallon, which would be a whopping $500 a month for the average consumer. Imagine if you're one of those people with a 10 mpg SUV/truck… enjoy spending $1,250 on your gas (or as I like to call it, a home mortgage).
As gas prices continue to rise, the percentage of money the average consumer spends on gas gets greater and the amount the can spend on conveniences gets smaller. Instead of being able to buy that new video game you wanted or the nice sweater you deserve, you're stuck instead spending this money at the pump. No wonder the economy is shot! The population of America is just over 301 million people. If even a quarter of those people stop spending $50 a month on consumer goods, that's $4 trillion a month that isn't going into our economy that used to. With staggering statistics like that, it's no wonder things aren't good.
This is without even factoring in the rise in cost of consumer goods due to the rise in cost of transporting said goods to your local stores. And if consumers buy less, this forces companies to charge more to maintain their status quo. So not only is this trend in rising gas prices leaving Americans with less money to spend, but it's also making the things they buy cost more. And as people buy less, business suffers and employees don't get the raises they were used to, again amounting to even less money.
Unfortunately there is no simple solution to fix this mess aside from hopping in a Delorean, accelerating to the speed of 88 miles per hour to generate the necessary 1.21 gigawatts of power, and going back in time to warn America ten years ago that they need to proactively do something about this. There is some blame to be laid on the rising gas prices to greedy OPEC members and an unsettled Middle East, but the biggest reason (and an unsolvable one in my opinion) is the explosion of gasoline/oil use in China and India. As these countries get bigger and bigger (population wise I me
This article has been view 357 times.
|