How Important [To The US Economy ] Is "The Price Of Gas"?

beejmi · Aug 30, 2012

I'm trying to "crystal ball gaze" into the future on this.

Is it "Scenario A" or "Scenario B"?

Scenario A

This goes on for 5-10 more years (like the past 5 years) Eventually the numbers start adding up. Grocery store charges more because the truck bringing the groceries to the store costs more [diesel fuel] which makes the groceries cost more. You buy less "chips" (or whatever it's just an example) at the grocery store because you have less income and also because the "chips" cost more. Eventually less "chips" are sold and then the "chip" company cries poor and has to cut back jobs because of less revenue. Wash, lather, rinse, repeat.

Scenario B

You use 30-40 gallons a week. Gas costs an extra $1 more than it should or it used to or whatever. $35 extra. Easily put aside. Everybody move on, do not be alarmed.

I guess I am asking how important is it that this "gets under control" now and in the future?

buddyboy · Aug 30, 2012

you have to look at the inflation rate of other goods and services and determine the relationships.

it could be argued that current gas prices are right where they need to be, and might even be a little low.

now compare when adjusted for inflation

economics can be an interesting monster

Defying · Aug 30, 2012

thats a crazy graph... wish I paid more interest in economics.... I think that would satisfy my craving for numbers...

Mr_Mark · Aug 30, 2012

Awesome Graphs.... I noticed we are in "Great Depression" price range

Willie99 · Aug 30, 2012

it's very important, it impacts everything we do

consumers have less money to spend, and the products they buy cost more

businesses have smaller profits, meaning they have less money to hire new employees and less money to invest in new technologies

investors earn less profit since businesses are selling less of a product it costs more to produce, so there's less venture capital

from an economic standpoint it's a lose, lose, lose

ProPokerPlayer · Aug 30, 2012

You also have to take into account how it effects peoples outlook on the economy as a whole. With high gas prices consumer confidence drops and that effects the overall economy.
With consumer confidence already at an all time low due to the disaster in the White House high gas prices can only make things worse.

EasyMoney · Aug 30, 2012

I wasn't alive in 1931 when gas was .17 a gallon but I'm going to go out on a limb here and say that people weren't driving 300 miles a week either. So while the "price for inflation" may have been about the same as today I'll say that people spent alot less money because they didnt drive near as many miles.

HacheMan · Aug 30, 2012

It all starts with the price of Gas.

It's really not complicated.... If everyone had $20 more per week they weren't paying on Gas people could afford more things each week and it would obviously go back into the economy by being spent on something else...

CoachCB · Aug 30, 2012

The price of gas is one of the main things that impact the average, everyday citizen. 47% of citizens, due to tax breaks, tax laws, etc do not pay a single dollar in "income taxes". However, they DO pay for gas and transportation cost no matter what kind of job they have (unless they walk or ride a bike to work, which is very rare outside of large cities).

So, I think gas prices impact the economy significantly.

---

EasyMoney · Aug 30, 2012

CoachCB said:
The price of gas is one of the main things that impact the average, everyday citizen. 47% of citizens, due to tax breaks, tax laws, etc do not pay a single dollar in "income taxes". However, they DO pay for gas and transportation cost no matter what kind of job they have (unless they walk or ride a bike to work, which is very rare outside of large cities).

So, I think gas prices impact the economy significantly.

---

I agree completely. And honestly, I don't pay for gas. My work does, but I can't believe the amount of coin people drop on gas every week. I remember I was in college in Georgia in 1999 and gas was .87. I could fill my camero to the top for like $14. Now if I did have to buy gas it would cost me $59. and that was just 13 years ago.

The only thing I would point out here is you say 47% of citizens don't pay taxes which is technically correct but that number means every citizen. counting kids, who obviously don't have jobs to pay taxes with and seniors who are retired and people who choose not to work. Its not 47% that have jobs and still dont pay taxes.

gmenknicks · Aug 30, 2012

not for the oil industry, shareholders, and every other business associated with oil and gas

Willie99 said:
it's ver important, it impacts everything we do

consumers have less money to spend, and the products they buy cost more

businesses have smaller profits, meaning they have less money to hire new employees and less money to invest in new technologies

investors earn less profit since businesses are selling less of a product it costs more to produce, so there's less venture capital

from an economic standpoint it's a lose, lose, lose

FairWarning · Aug 30, 2012

EasyMoney said:
I wasn't alive in 1931 when gas was .17 a gallon but I'm going to go out on a limb here and say that people weren't driving 300 miles a week either. So while the "price for inflation" may have been about the same as today I'll say that people spent alot less money because they didnt drive near as many miles.

You didn't have expressways either, nor did cars get 30 miles/gallon.

TomGshotput · Aug 30, 2012

The price of gas is far less than what we would be willing to pay. So every time you put gas in your car you are actually saving money, according to logic usually seen at therx

So long as the price of gas is determined by free-market forces, it is a reflection of the economy, not something that decides the direction of our economy

EasyMoney · Aug 30, 2012

FairWarning said:
You didn't have expressways either, nor did cars get 30 miles/gallon.

The Ford model A from the 1930's got 25-30 MPG with a 4-cylinder engine that had a top speed of 65 MPH. Basically we havent really come all that far MPG wise in the last 80 years. Either way buying lets say 10 gallons a month at .17 a gallon is alot cheaper then today where we buy 60 gallons a month at $3.69 a gallon. Inflation or no inflation.

Willie99 · Aug 31, 2012

TomGshotput said:
The price of gas is far less than what we would be willing to pay. So every time you put gas in your car you are actually saving money, according to logic usually seen at therx

So long as the price of gas is determined by free-market forces, it is a reflection of the economy, not something that decides the direction of our economy

so when the economy is tanking, the price of gas increases like it's doing?

and when we had a strong economy, the price of gas was lower?

the price of gas often times has an inverse relationship with our economy, and it's obviously influenced by many variables not impacted by economic strength

THawk+ · Aug 31, 2012

Those graphs are great and all but let's see one for wages and see the difference in wages then and now...

Let's see a graph for amount spent then per month on gas and now... That will tell you how it effects people more than those graphs for inflation

buddyboy said:
you have to look at the inflation rate of other goods and services and determine the relationships.

it could be argued that current gas prices are right where they need to be, and might even be a little low.

now compare when adjusted for inflation

economics can be an interesting monster

Doug · Aug 31, 2012

Why is the 1917 price the "right" price ?

It has gone from about $1 in 1999 to $4 now. people can easily spend 10% of their income just on gas if they have a drive to work.

texansfan · Aug 31, 2012

So in 1917 gas was .17 a gallon? I remember in the early 70's when it was still only .42 a gallon.

buddyboy · Aug 31, 2012

Income way up:

of course the lower your income the larger % of it will be spent on food and gas... well maybe not food since it is subsidized by the government

free markets are the answer, it always sets the price to what someone is willing/forced/able to sell something for to what someone is willing/forced/able to pay.

8ate · Aug 31, 2012

Anything over US$4.25/gal will slow down and potentially stop the US economy..>>just sucks too much money out of other expenditures into the gas tank...

gl

How Important [To The US Economy ] Is "The Price Of Gas"?

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