Is a 1970s-type oil shock ahead?
A demand-driven price change works differently than a supply-driven change.
The higher prices are a result of increased domestic and international demand for gasoline. Price increases do not stop people from driving; the gas is still there, but the increases do cause people to spend more on gasoline.
Think of this as the circle of life: When I fill up, I get the gas I want and the station gets the dollars it wants.
Those dollars do not disappear — they are circulated throughout the economy. Gas-station owners take the dollars they receive and buy stuff that they want, which, in turn, becomes someone else’s income. This pattern repeats itself until these exchanges eventually peter out
( Full story here )
The higher prices are a result of increased domestic and international demand for gasoline. Price increases do not stop people from driving; the gas is still there, but the increases do cause people to spend more on gasoline.
Think of this as the circle of life: When I fill up, I get the gas I want and the station gets the dollars it wants.
Those dollars do not disappear — they are circulated throughout the economy. Gas-station owners take the dollars they receive and buy stuff that they want, which, in turn, becomes someone else’s income. This pattern repeats itself until these exchanges eventually peter out
( Full story here )
posted by Oil Shock at 5/17/2006 01:02:00 AM
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