Why high gas prices these days? This is perhaps one of the most commonly heard question as crude oil prices continue its dramatic soar throughout the first half of 2008. Excessive demand coupled with a fixed supply of crude oil has resulted in gas prices soaring to unprecedented limits. This increase in prices has resulted in far reaching effects on the daily lives of the average consumer. In examining the effects of high gas prices, we offer you an insight on why high gas prices should cause you to worry.
The first thing you would notice with high gas prices would be a significant increase in fuel cost for your car. Yes, for the same amount of petrol which you would normally buy at your local gas station, you would now need to pay more. This result in increased cost on your part as travelling becomes an increasingly expensive affair. Indeed, with crude oil prices in excess of $120, travelling to work has never been more expensive. Thus, the immediate result of high crude oil prices would be an increase in cost of car travel.
Yet, the effect of high gas prices is in no way constrained merely to increased cost of travelling. A closer understanding would reveal far reaching consequences.
High gas prices often lead to a general increase in prices of goods and services. This is known as inflation. It is important to note that transport cost has to be factored in with relation to goods and services purchased by the average consumer. For instance, when you buy a new set of furniture, your local furniture store would often provide delivery of your new piece of furniture right up to your doorstep. However, given high gas prices, your furniture store would often have no choice but to pass on the rising cost to you as increased gas prices would mean eating into the store's profits. A similar situation is observed across other industries as suppliers of goods and services pass on higher transportation cost to consumers by marking up prices.
Subsequently, the value of money would be adversely affected given the general inflation caused by the increase on prices of goods and services. This means that the value of every dollar earned has decreased as it can now buy fewer and fewer goods. This provides a disincentive to work as the same amount of wage would now only be able to purchase a smaller amount of goods. This could also spell hardship for the poorest workers as they would be struggling near the level of poverty. Given a long time frame, this could possibly lead to social disturbances and crime.
Rounding things off, it is insufficient to think that high gas prices are only a cause of concern for consumers who drive. The fact is inflation is something very real and would affect all consumers given the increase in gas prices. Furthermore, given such a situation, we would now have to accept a lower real wage as our salary can now buy a lesser amount of goods and services as compared to before. Finally, social disturbances and crime in the long run would affect us in negative ways. Thus, high gas prices are indeed a cause of worry for us.
Lewis Hopewell provides valuable advice on how you can save on high fuel oil prices
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