High Gas Prices Affecting Economy

Introduction

People often complain about the price of gasoline. High fuel prices affect people's daily routines, and many news outlets report tales of "pain at the pump." The high cost of gas also causes many other prices to increase, such as those for food production and shipping, leading to a general rise in prices. Indeed, when gasoline is more expensive, it can hurt the entire economy, causing people to spend less money on nonessentials in order to pay for increasingly expensive yet necessary items. U.S. gas prices have climbed to record highs—significantly more than $4 a gallon in certain places—in recent months, prompting calls for the government to take a variety of measures to lower those prices. The price of gasoline is determined to a large extent by the cost of crude oil, which, after being extracted from the ground, is refined into gasoline. Oil prices are set by traders in commodities exchanges, where oil producers sell to companies that will then refine the oil into gasoline and sell it (Van Vactor, p.5-8).

Discussion

In September 2008, the U.S. economy stood on the brink of collapse, with the survival of the U.S. banking industry in question. A recession that had begun the previous year worsened considerably, and millions of people lost their jobs. As that happened, demand for fuel fell significantly, and gas prices plummeted, along with oil company profits. High oil prices have put upward pressure on inflation and interest rates. There are more signs that high oil prices affect economic recovery. The global recession is now at the recovery phase, but it seemed difficult because of the high gas prices around the world. Gas in the major contribution to any industry or sector and if the gas prices will not be controlled it will bring adverse effects in our economy. There is a clear need to increase oil supplies to world markets as it is noticed that the shortage of oil increase the gas prices in the county and bring inflation. The gas prices are associated with every goods and services in our country and have brought hyper inflation in some countries. Higher oil prices may delay the recovery of world economy and there are chances that I could take much longer time that is expected (Dicker, p.78-99). Oil producers to prevent damage which may be incurred by the economy. We are ready to use all our means ...