Monday, September 26, 2011
Gas Prices are Down, Finally
With economy still in a slump and 9.1% of America unemployed, it's good to see at least one issue has seen improvement. Gas prices have lowered to under three dollars a gallon in parts of Texas, Michigan, and Missouri. In Bridge City, Texas, the price of gas was only $2.62 a gallon. Some analysts believe it might reach as low as $2.50 a gallon in some places by Thanksgiving. Some economists are saying that it is to stimulate the economy. More people will decide to go the movies, or eat out, or go shopping. Also it might just drive down the prices of other things too as the price to transport it from Point A to Point B will be lower.
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5 comments:
Do you think the price of gas is being lowered because of the market (and Adam Smith’s theory of competition), or do you think it’s because of what the stock market has done over the last week?
The economic advantages to gas prices being lower are huge. Many people will argue that spending stimulates the economy and lower gas prices will shoot spending up. People won't have to worry about the price of the drive and focus more on going places. One of the biggest advantages is shipping costs. Every consumable known to man will decrease in price if it cost less to move it. Delivery of products from shopping online will go down too, again increasing spending. Plus with gas prices down people are just flat out happier. When people are happy, again they spend more. That is all.
While the decrease of gas prices is a positive turn in the economy it will have to continue lowering to fully effect the market. In the short term goods require less money to be transported causing a decrease in overall prices. This quick and easy benefit will greatly help stimulate the economy. However people spending more and going out more will take a more sustained decrease in prices. People now more than ever are very conscious about the economy and its state. This causes them to not spend as much and conserve more money. People will need to see continued improvement before they begin to return to their spending habits. Everyone is simply to skeptical of the random nature of the economy to change their habits instantly. While the lowering prices is a great sign we will need more positive growth before people will believe it is okay to luxury spend.
I think the price of gas has been lowered because of what the stock market has done recently. A lot more people will be at ease when they travel. Although it won't change drastically it is still a good sign. Spending will create an economic boost. Lower gas prices will create a chain reaction. Like what Copper said, in-store and online product will go down. Now maybe I won't have to spend $20 on shipping for Air Jordan XI Concords this December.
Immediately after I read this I asked the same two questions as smith did. Is it the competition that’s bringing the price down or is it really to stimulation the economy? I honestly believe that all of these things factor in together. If we could only get our economy back to where it was, businesses would be more successful because the consumers would be able to consume products from these businesses, which ultimately will bring happiness to both the people and firms and businesses.
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