The High Cost Of Oil

The U.S. economy has been designed to use massive amounts of cheap oil to transport massive quantities of goods over vast distances. When the price of oil goes to $100 or $150 a barrel, it fundamentally changes the dynamics of our economic system.

Nobody has ever been able to prove that the U.S. economy can successfully handle a price for oil over $100 for an extended period of time.

Do you remember what happened back in 2008? The price of oil hit a record high in June and then the entire financial system came unglued just a few months later.

The price of oil affects the price of almost everything else. Almost all forms of economic activity use energy. Almost all goods have to be transported a significant distance.

When the price of oil goes too high, some types of economic activity simply become unprofitable. If the price of oil stays this high from now on, there are many businesses across America that will be forced to close.

A high price for oil is also going to hit U.S. consumers really hard. According to AAA, the average price of a gallon of gasoline in the United States is now $3.70.

Many are convinced that the average price of gasoline is going to shatter the all-time record of $4.11 that was set back in July 2008.

So how much did a gallon of gas cost a year ago?

One year ago the average price of a gallon of gasoline was just $2.83.

Over the past 12 months the average price of gasoline has gone up about 30%.

So has your paycheck gone up by 30% over that time?

The truth is that wages have been very stagnant in the United States for a long, long time.

That means that U.S. household budgets are being increasingly stretched. People have to fill up their cars so that they can get to work or to school. Americans can cut back on pleasure driving to save money, but most of the driving that all of us do is to get to places that we have to be.

So if gas costs more that means that consumers are going to have less to spend other places. Consumer spending accounts for approximately 70 percent of the U.S. economy, so any slowdown in U.S. consumer spending would be extremely significant.

Already a substantial percentage of the American people are feeling quite stressed about gas prices.

According to a recent Associated Press-GfK poll, approximately two-thirds of the American people believe that rising gasoline prices will cause significant hardship for their families over the next six months.

We are heading for some really difficult economic times.

So the question is, what can we do about the higher costs of oil. Fuel Direct!