NPR's Morning Edition reported today that gasoline and oil prices are on a steady rise once again. Though the US remains mired in a recession, many other large countries (like Brazil and China) are demanding more energy, while the supply for oil is flat or shrinking. The cost of crude oil is creeping towards $100 a barrel again.
When this happened in March 2008, forecasters correctly predicated that gasoline would soon be $4 a gallon. Over the summer, more and more suburban homeowners could no longer afford both to fill up their tanks and to pay their mortgages. And we all know what happened then.
But when all this transpired two years ago, people still had jobs and credit. That's not the case anymore - Americans have less purchasing power, which means that $4/gallon gas is going to hurt a lot more this time around.
One financial analyst quoted in the story brought up an interesting statistic: "A $10 increase in the price of oil is like a $200 million tax on the economy a day," said Gary Taylor, a principal with The Brattle Group. That's $1 billion every workweek.
Luckily, we have new government leaders coming in who are gung-ho to cut our taxes. I look forward to seeing how they'll set us free from the $1 billion/week oil dependency tax.
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