Verified Document

Oil Prices: The Economic Consequences Thesis

Higher prices means a decrease in demand, and consumers who are already experiencing difficulty paying for basic goods and are even less apt to buy luxury items. Consumers are more likely to cut things out of their budget, and look for lower-priced items when shopping for necessities. Already, I find myself buying generic goods, looking for food on sale, and putting off replacing clothing and shoes with new items. Some people are even giving up beef, not for ethical reasons, but because it is lower in price than chicken and vegetables substitutes (Krauss 2008, p.1). Not all industries are suffering because of higher fuel prices. Of course the oil and gas companies themselves are flourishing. Also, while the local middle-level chain restaurants in my town...

Parts of this document are hidden

View Full Document
svg-one

I realize that I am lucky to live in an area of the country that is not suffering as much as some other regions. Not all regions of the U.S. are equally affected -- urban dwellers with access to public transportation and for whom car-pooling is more feasible are less cash-strapped than residents of extremely remote, rural areas dependent upon agricultural production. "Across broad swaths of the South, Southwest and the upper Great Plains, the combination of low incomes, high gas prices and heavy dependence on pickup trucks and vans is putting an even tighter

Sources used in this document:
They less money I spend in general, but particularly on luxuries, the more manufacturers' inventories build up in warehouses, and the fewer new workers are employed. This economic 'spiraling' effect means that I face an increasingly competitive job market and the less likely I am apt to spend money on consumer goods, the more likely I am apt to face the difficulty of finding a high-paying job or any job at all, so I can pay for my student loans. In general, all workers may also have to reconsider the value of taking certain jobs, or a second job to make ends meet, because of the prohibitive costs of a long commute.

Because they too must deal with the concept of scarcity and finite resources, producers must raise prices on goods and services, because it costs more to transport all products across the country and overseas. Higher prices means a decrease in demand, and consumers who are already experiencing difficulty paying for basic goods and are even less apt to buy luxury items. Consumers are more likely to cut things out of their budget, and look for lower-priced items when shopping for necessities. Already, I find myself buying generic goods, looking for food on sale, and putting off replacing clothing and shoes with new items. Some people are even giving up beef, not for ethical reasons, but because it is lower in price than chicken and vegetables substitutes (Krauss 2008, p.1).

Not all industries are suffering because of higher fuel prices. Of course the oil and gas companies themselves are flourishing. Also, while the local middle-level chain restaurants in my town appear to be patronized less than they were, discount department stores seem to be doing well, as consumers can get all of their shopping done in one store, minimizing gas usage, and also look for bargains. I realize that I am lucky to live in an area of the country that is not suffering as much as some other regions. Not all regions of the U.S. are equally affected -- urban dwellers with access to public transportation and for whom car-pooling is more feasible are less cash-strapped than residents of extremely remote, rural areas dependent upon agricultural production. "Across broad swaths of the South, Southwest and the upper Great Plains, the combination of low incomes, high gas prices and heavy dependence on pickup trucks and vans is putting an even tighter
Cite this Document:
Copy Bibliography Citation

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now