our dependence on oil

7 08 2006

Gas prices are going up again, after the problems with the Alaskan pipeline.  And Iran is threatening to make oil go up to $200/barrel if we impose sanctions on them.  (It’s currently about $76/barrel.)  I don’t know if Iran alone can force that, but still it’s something our country should consider.

Oil and gas are used for a lot of things in the U.S., especially for distributing goods across the country.  If the price of shipping by truck, train, airplane, and boat increases, then the price of the product eventually has to increase to cover it.  My question is, if things did get really bad and the cost of oil doubled or tripled, would our economy be able to handle it if the cost of all our products doubled?  A lot of people would run out of money (which is compounded by the fact that most Americans aren’t saving money these days), and we’d have to learn to do without a lot of luxuries we currently enjoy (and probably take for granted).  It would be a big wake-up call to us, but it would really hurt a lot of families that barely have enough money now.

Let’s hope our country can reduce our dependence on oil…  I know this will take years, but we need to make it happen as fast as possible.




One response

8 08 2006

Yep – I’m not sure if we could wean our dependence fast enough to prevent a large shock to our economy. We already have had minor jolts here & there due to high oil prices (remember just a few years ago when gasoline was only 90 cents p/gallon?) and to a lesser extent high steel prices, but so far the US economy has been able to withstand it. If the price does go to $200 a barrel, however, I’m not sure how we would fair at that point.

One thing to point out, though, is that as it stands right now oil IS the blood of our economy. This means, as you point out, that as it goes up, so do prices. Could this be all gloom & doom though? Could it be a possibility that as oil prices went up, and consumer goods went up, that pay also increased for the folks producing, selling, and distributing those goods? I’m no economics professor by any stretch, but it seems to me that our economy could adjust to whatever oil prices became…

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