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Gas ws $4 before, and it had no real effect on the economy overall.
The real reason is because too much of our wealth is in the hands of people who do not spend it on consumer goods/services, nor do they invest it in economically expansive ways. Let consumers have a share of the wealth, and they will spend it, no matter what the price.
Nobody will spend his wealth establishing a widget factory to employ widget makers, because nobody has enough money to buy widgets. Too much of the wealth is in the hands of a few people who already have a widget, and too little in the hands of those would would like a widget. That is really the bottom line. No discretionary money in the hands of consumers, so no consumption, so no investment in production.
Current economic thinking is that if the money is held back from consumers and diverted to investors, the investors will produce what consumers can't afford to buy, and create an economic dynamic by piling unsellable product on the shelves. Childish thinking.
It would be foolish to think high enerergy prices will NOT effect the economy. Everything in economics somehow ties back in to energy use, and specfically, fossil fuels. It's what our world is build upon and is our cililization's Achilles Heal.
First, there is no economic "recovery". So I would think that it cannot "fail" if it doesn't exist.
Second, the real cause of the economic woes is the world's monetary systems - all unbacked paper. Look folks, you can go a long time with this stuff, getting people and businesses further and further in debt, but at some point, the *** is UP. We need to let the debt out of the system. The longer the Fed keeps printing out of thin air, the higher gas (and food, etc etc) will go.
Er...you DID say that gas was going up, didn't you?
What recovery ?
June 2009 the recession "officially ended".
18 months later..what recovery ?
Sometimes it hurts to admit we doomsayers were wrong. I personally have no problem doing it. The economy is surging full steam ahead and I will admit I am quite surprised. In Las Vegas, our unemployment rate dropped nearly a whole percentage point. In my hometown of Phoenix home construction has restarted. Look at this thread below in the LV section:
Europe has known high energy prices for years and it has not hurt their economy appreciably.
Europe is much more densely populated than the US is ..... makes it much easier to rely on mass transit, bikes and even walking to get where you need to go....
Quote:
Originally Posted by HappyTexan
What recovery ?
June 2009 the recession "officially ended".
18 months later..what recovery ?
glad i'm not the only one who has been wondering the VERY same thing....
$4.00/gal. gasoline might not throw the country into a depression (like we're not near one already), but $4.00-$5.00/gal. diesel fuel absolutely will, and we are getting very near that point in many places right now. As an oil company guy I know says, "The US drives on gasoline, but the economy runs on diesel fuel."
We will very likely see severe increases in diesel fuel prices in the next year or so--my prediction is $5-6+ per gallon diesel prices--and very possibly moderate to severe diesel fuel shortages. If the economy does manage to actually grow for any period of time longer than a few months (and I think we're currently in nothing more than a "dead cat bounce" in the economy), then such price increases and shortages are inevitable.
Why the problem with diesel? Because:
1. Worldwide diesel fuel demand is exploding, especially in the developing countries.
2. The US refinery infrastructure is geared toward producing more gasoline rather than diesel fuel.
3. The US freight transportation system is so horribly dependent on trucks (which are only 1/3 as fuel efficient as rail transportation).
None of those problems can be solved quickly or cheaply, and there is almost no effort being made currently in this country to address any of them. If the crisis becomes severe enough, it could lead to food shortages in this country, as our food supply system is completely reliant on diesel fuel, from cultivating and planting clear through the production and transportation system for food. Get ready.
One other thing, when I say "diesel fuel," one can make the same statements about another "medium distillate" fuel--jet fuel. The coming crisis in middle distillate supplies will also pretty much destroy the airline industry, as well.
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