Wednesday, March 2, 2011

Ways The Economy Is Affected By The Rising Cost Of Fuel

The economy is affected by many factors. When considering the economy specifically through oil and gas you might think, what relationship does the gas factor have with the economy? Canada operates in a global marketplace. Oil prices are set in the international marketplace and reflect the global supply and demand conditions. The prices are influenced by factors such as weather, strikes and wars. Here are just a couple obvious ways the economy is affected by the high cost of fuel:

Consumer spending – One of the biggest impacts the price of gas has on the economy is how it affects consumer spending. A big portion of our economy is driven by consumption. When gas prices go up, the demands for goods and services decreases. We are forced to spend more money on gas so that we can drive to work or to run errands that it leaves us with little to no money to spend on other purchases.

Transportation costs – When gas prices go up, the obvious happens. It costs more to drive, it costs more for buses and planes to operate, it costs more for trucks to deliver goods which all leads to reduced economic activity.

What can be done?

We’re misinformed to think that not purchasing gas on any specific day will cause a decrease in gas prices. The price will only decrease should the amount of gas demands declines. It’s priced on supply and demand but we are headed in the right direction by companies producing more energy efficient products. From our appliances to our automobiles, we are much more energy efficient than we were 20 years ago. If a large percentage of our population took steps to conserve energy it will be felt by the gas companies. Carpool, walk, jog or bike it to work if you can. Take measures to make your home more energy efficient like turn off the heater in your pool, properly caulk all your windows and doors, purchase energy saving items around the home. This will not only make a slight impact it will also save you money!
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