Oil prices have been insanely high recently. I suppose it does have a good side, since people who own gas-guzzling vehicles will be less likely to drive their polluting cars. Well, that's not good if you actually own one of those cars. Prices are bad enough if you own a car with decent mileage per gallon.
Oil companies recently have been very greedy. I remember only a few years ago, it was considered craxy if a gas station had prices above $2, and now those prices are sailing above $3 per gallon. These prices are definitely denting the wallets of those who aren't as well off as others, and the oil companies prosper.
Well, anyway, here' a post from "Greg Mankiw's Blog" about oil prices.
Where have all the oil shocks gone?
Oil prices are near record highs, which raises a fascinating question. In recent years, the U.S. and world economies have typically shrugged off oil price increases. By contrast, oil price increases are a major part of the conventional story of the economic turmoil of the 1970s. Why the difference?
We economists do not have a complete answer, but we have some clues. One important clue is below (via Carpe Diem):
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjffnTM_oYyCRJydHVXCx0R5OKm4Tr6N7C_Sc9QlXLQycNF7BuUa8lBhxgfysfUMmP1Csm3kFz2wjR2jgYGCyWzVSU_u3aUZhH3JuDf1u17uWsCp4jg2eYSy1FINHrsSXiN9lq-4CuAX-8/s400/energy.jpg
The economy is far more energy-efficient today than it was in the past, in part because economic activity is based more on services and less on manufacturing. As a result, energy prices matter less today.
In their research on the topic, Blanchard and Gali also give credit to more flexible labor markets, better monetary policy, and a bit of luck.
Another hypothesis: The macroeconomic effect of high energy prices may depend on whether the high prices are the result of reduced supply or increased demand. Perhaps in the 1970s high oil prices were largely the result of supply restrictions, whereas in recent years high oil prices are driven more by increased demand from a booming world economy.
One final conjecture: Maybe the recent increase in oil prices has been less sudden, making it easier for other prices and thus the economy to adjust. In particular, it may not have affected the skewness in the distribution of relative-price changes in the same way as previous oil shocks did.
We have no shortage of theories. The definitive study on the macroeconomic effect of oil prices is still waiting to be written.
6 comments:
well, there's not much an opinion to agree or disagree with, but i would just like to say that, as a car driver, it definitely sucks that oil prices are so high and limits the activities or places i want to go to, but on the other side, it kind of forces me to carpool more with my friends, and we end up bonding more because we carpool. i suppose there's a flypside to everything.
Gas prices right now are pretty expensive compared to when we were 7 and 8 years old. Heck, compared to two years ago. But if I owned a gas station and could charge that much and get away with it, I would. I think it just goes to show that a lot of people out there do not care about our environment. Lets think, Escalades and Land Rovers are still being bought so there must be something wrong. But on the side that gas companies are able to sell their gasoline for so much, that really shows that people are pretty dumb! When we used to have days where no one was suppose to buy gasoline from a station, I always use to see cars and trucks filling up. We will not be able to get those price down, even just a little bit, unless people are willing to demonstrate that they will not be willing to buy as much gas if the prices are to high.
Oil prices are high because oil has high demand and low supply. Its the free market yo.
People are going to drive basically no matter what the price of gas. We are having trouble getting oil because of various foreign conflicts and our dollar is weaker so gas companies are having to pay more for oil, so they will all charge more for gas.
Prices will come back down when supply increases because then the gas stations will lower prices to try to compete for business.
Firstly, I hate having to go to the gas stations because i dread seeing those incresing prices! It drains my wallet quicker than one trip to the mall. But....I think that these gas prices are a totaly good deterrent for people. Serriously, when i get in my car to drive somewhere I do think about how much gas I am using and I always wish I could get to my destination another way. It sucks that the prices are going up but I think it keeps us all honest with the impact that our cars have on our wallets and on the environment.
going to the gas station is pretty depressing with these high gas prices, but a lot of people may feel like they don't have a choice in choosing their mode of transportation because they have to commute long distances and driving is the fastest way, or public transportation doesn't go to their destination. I agree that high gas prices are are mainly from high demand and low supply, but another major factor is the gas companies know we need gas and are testing our limits to see how much we'll pay. I've noticed in the bay area gas prices are ESPECIALLY high, in LA I've found gas prices as "low" as $3.07 and in Las Vegas gas was as low as $2.97! Seeing these low prices enrages me that we're stuck with these much higher prices, and that gas companies are getting away with it.
Post a Comment