Monday, April 15, 2013

Price of Gas and Consumer Goods

By: Ashley T.

High gas prices have been a major problem for consumers because of the low supply of oil that we are able to get. This also is a major impact for the economy to recover. Not only do gas prices reduce consumers income as they are filling up their car but it also impacts every other item that they purchase such as groceries, electronics, every good in the store. But why is that? To get goods to a store they don’t just magically appear. It’s some ones job to delivery that product and to do that their way of transportation needs to be kept full.  It takes gas to transport goods to companies to be produced into one product. Then, these products are shipped to stores around the country to be sold, having more gas be a cost factor during transportation of the goods.  When consumers go to the store to buy the goods they are also paying for the transportation of those goods, the gas it cost to get it there. This is also causing less economic activity.
Back in the day goods were cheap. Most of the time they were grown in local gardens and people would deliver them by horse and buggy. Times have changed dramatically. Soon factories were discovered and cars came about. When cars came about, back to the literal definition of economics, cars weren’t something people had to have. Cars were new something that everyone wanted to get their hands on. Factories helped make food and other goods in bigger portions. People started having horses as pets, and goods and gas prices were cheap. The world became a different place and today the world has changed dramatically.
In George Bush’s first term gas was $.92 a gallon.  Over Bush’s four year term gas rose to $1.12 a gallon.  When Bill Clinton was president his four year term caused an increase of gas prices to a total $1.42 from Bush’s latest price of $1.12. After awhile gas kept going up. Today under Obama’s power gas is over $3 in the 2012-2013 year with no signs of falling in 2013. This was the first time gas has stayed over $3 for an entire year. Obama said he hoped to see higher gas prices in order to hope consumers to switch to other forms of energy.

Gas prices have been an issue for a long time and I’ve understood why. I didn’t understand why goods are at such a high price now days. After reading this article it now has all come together. All the costs of making a product and transporting the product are all tied into the cost of the actual product. Usually in the winter time it’s hard to get fresh fruits because many states are in winter as well, this causes states further away to transport goods to the people in states like us who have winter but still need our servings of fruit. It make complete sense now that gas has made a huge difference in many things that we do in everyday life.

4 comments:

  1. Good analysis on the relationship between gas and rising consumer prices. However, one can't be too quick to cast away inflation and rising price levels when talking about increased consumer prices. While yes, it is true that gas has increased prices on a relative basis, the big and overall change over time does not come from the price of gas. Instead, the dramatic changes that would been seen from the Bush Sr. administration to the Obama administration would be a rising price level and inflation.

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  2. I believe this is a positive effect of rising gas prices in the sense that it will make people go to other methods of transportation. This is a positive transition because it helps the environment that we should be preserving. If people turn to car pooling there are less emissions going into the air. There are some draw backs though. Energy efficient cars could have a potential of being expensive to fix which consumers do not want to pay large amounts of money to fix a car. It is also awful that there is a correlation with gas prices and costs of goods. The reason it is bad is because if Obama believes gas prices will raise so will the price of goods. As prices increase consumers spend less in the market and it decreases economic growth. Overall, the government has the final say but if they choose to increase prices they will have to come up with other ways to stimulate the economy.

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  3. This is not a good way of getting other people to other types of transportation because other types cost just as much.

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  4. It can really go both ways on this. On one hand it will encourage other modes of transportation such as busses and bikes which will help the environment. On the other hand though some of the new forms of fuel are too new, where the cars that take them are either unreasonably expensive, or they lack the power at this time that people desire in traditional cars.

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