According to AAA Motors, America has rung in 2012 with record high January gas prices, with some areas pricing gas reaching nearly $5/gallon, though the national average remains well below $5, at $3.39/gallon. With Iran's recent threats to close the Strait of Hormuz, a "critical shipping lane" which passes millions of oil barrels a day, countries of high demands of oil, like China, India, and Brazil, have been on edge. Kyle Cooper, director of research at IAF Advisors, does not expect gas prices to fall in the coming months.
Yet, there may be a silver lining in this gas price dilemma. Some experts believe that this recent increase in gas prices is a reflection of the slight reprieve in the U.S economy. Where there is economic recovery, there is increased spending/travel, and where there is increased travel, there is a increase in demands for gas. (Higher demand tends to hike up gas prices.)
Although these rising gas prices may reflect positively on the American economy, it's unnerving to think of how gas-dependent our country is. Even though car companies are working to develop more effective electric/hybrid cars, the fact of the matter is, the majority of American transportation runs on gas. Hopefully we'll become less gas-dependent in the near future..
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3 comments:
I don't think the American public would see an increase in gas prices as a silver lining, even if it might be an indication of a recovering economy. To the public, I think oil prices are just reminders of the seemingly never-ending crisis in the Middle East. And now that there's a huge nuclear energy situation in Iran and so many countries are worried about stopping the creation of weapons, oil will probably always be something to think about since Iran is such a big exporter.
However, I completely agree about the U.S. using too much oil. But there is a chance that this price increase will convince more people to start being less gas dependent. Maybe by constantly reading about oil, people will realize that this situation will not go away and that it's time to start finding alternatives.
Although I agree with Pritika's comment to an extent. I believe that Keaton is correct when she says that higher prices usually correlate with an increase in demand. I agree with Pritika that this affects the American people negatively, this is generally an indicator that the economy is growing stronger.
Gas-dependency is something that mainly hurts the U.S.; however, some renewable and green energy sources cost a lot of money and resources and so for now, it seems that gas is still the most feasible source of energy. In addition, drilling for gas in Alaska would be extremely harmful to the environment so there is that externality to consider as well.
I think this is a really interesting take on the situation. I would have to agree that oil dependency is a huge issue, and definitely say that although a spike in gas prices may look good to economists, it probably is not pleasing the American people.
This is especially interesting because last weekend at HMC I was on the House Energy and Commerce Committee and we talked a lot about his subject. I think a really important thing for us as a country in the near future (hopefully) will be to turn to public transportation and turn away from gas guzzlers. The rising prices go to show how important that will be much sooner than we think.
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