The impact of rising fuel prices Introduction This essay will review how the rising fuel prices affect the different macroeconomic variables such as inflation, rising production cost, unequal economic conditions between oil exporting and oil importing nations. It will also examine the influence on airline industry, holiday companies, shipping industry and rising unemployment rates because of the higher energy prices. There will also be a review on car sales in India. This essay will also evaluate the rising demand for alternative energy sources.
Get Full Essay Get access to this section to get all help you need with your essay and educational issues. From around one dollar per gallon fifteen years ago, gasoline has reached up to four dollars per gallon in recent months.
Figure one shows a plot of retail gasoline prices over the Effects of gas prices essay fifteen years which illustrate the dramatic increase in price.
The problem of oil prices has had economic, domestic and political ramifications but ultimately, it may be economics which will untangle the issue with energy. A major cause of the rising gas prices is simple high demand especially from rising economies in Asia.
The rise in the global economy in the early part of the s has brought a frenzy of factories, construction and consumption to India and China.
These developing nations need large amounts of oil to feed their tiger economies which are growing at double digit rates year after year.
Their citizens are now buying their first cars, moving into new homes and working in ever expanding new cities — activities which all consume oil.
While the demand for oil is soaring, supply has not kept up. China and India are now competing for the same limited resources that modern economies in the West are already reliant on. This has resulted in the constant bidding up of the price of oil on world markets which ends up as increases at the pump Wall Street Journal, A segment of the economy which is especially sensitive to the highly volatile price of oil is small business.
Rising prices at the pump cause a chain effect of inflation as they raise transportation costs as well as the price of products dependent on oil derivatives.
Faced with these higher operating costs, small businesses have to face a tough choice of whether to swallow the higher costs or to pass the costs to their customers. Both proposals are equally tough due to the slim operating margins of small businesses and the easy possibility of losing their customers to their much more heavily bankrolled competition.
Even their revenue streams have been threatened as retailers face the prospect of losing customers who find it too expensive nowadays to take the trip to their store Perman, As can be expected, the public has had a negative reaction to the climbing price of gasoline.
With filling up at the pump costing more and more with each passing week, the average American family has to make tough choices in order to pay for their daily commute. Public outcry against the rising price of gas has prompted politicians and world leaders to scramble for ways to ease the price burden on the general public.
One solution that was recently put forth in the US was the use of offshore drilling to increase local oil production. On a speech last June 18,President George W. Bush unveiled his plans to improve domestic oil production.
The economic reasoning behind reversing the ban on offshore drilling would be that an increase in domestic oil production will lift supply and consequently bring down prices Herbst, This viewpoint was even a talking point in the previous general election as Republican candidate Sen.
While the economics of increasing supply to lower prices may be sound, there have been critics of the proposed lifting. The original moratorium was put in place as a form of environmental regulation.
Preventing oil platforms was a way to protect tourism and also to prevent potential oil spills from washing ashore and ruining the beaches.
More importantly, critics point out that reversing the ban today would have little immediate effects on easing the price of gas. Analysts say that any new oil from these new drilling platforms would take up to a decade to reach the pump due to the huge investment in time and capital needed to create an offshore drilling platform.
Lastly, the price of gasoline is not anymore dictated solely by supply and demand. The high prices of oil have attracted speculators who have invested in oil futures, creating artificial demand inflation resulting in a very real increase in price at the pump Herbst, The rising gas prices have not been a bane to all sectors of society; in fact it has been a boon to some segments.
Increasing fuel costs have forced reconsideration into the merits of alternative energy sources. Environmentalists have long argued for increased use of alternative energy sources.
These alternative energy sources are renewable and have less contribution to pollution.Effects of Rising Gas Prices - Gas has many effects in our society, and some of these effects have a negative impact in our life. Our daily lives depend on gas, when we go to work, school and going out.
First of all, the rising prices of gas, a critical input in almost all production processes, will trigger the price hikes of most consumer and industry products: the inflation. For example, after the gas price increases, the costs of transportations also increase.
Effects Of Oil Prices On Global Economy Words | 5 Pages. Student’s Name: Professor’s Name: Course: Date: Effect of Oil Prices on Global Economy Evidently, the connection between fuel and the world has resulted in an intimate relationship between global economy and the prices of oil.
contribute to rising gasoline prices. The major cause for increasing gasoline prices has to do with refining capacity. Even if oil were inexpensive, we would still have a problem . Below is an essay on "Effects of Gas Prices" from Anti Essays, your source for research papers, essays, and term paper examples.
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