Rising gas prices

By Maureen Aylward

Will rising gas prices hurt an already fragile global economy? Our Zintro experts comment on the contributing factors to rising gas prices.

Ralph Whitley, a management professional, says that people “feel” gas prices every time they fill up. However, the effect on the economy is often overstated. “For the average person driving 12,000 miles per year and getting 20 miles per gallon, a $2 per gallon increase will cost them $100 per month. While painful, this should not make the economy grind to a halt,” he says. “When regular grade gasoline hits $4 per gallon, consumers may make some adjustments to their habits, such as car pooling. Long term, they will make a small adjustment in their spending and go back to old habits.”

Whitley says that without some resolution to the latest issues in the Middle East, he believes fear and speculation will drive the price of a gallon of gasoline to $4.50 per gallon. “Short of a major armed conflict, this will be the extent of the increase. After peaking, the market will determine that some of the jitters are unfounded and fuel prices will fall to about $3.50,” he says. “If at least some issues get addressed, prices may continue to drop to a sustainable range of $2.90 to $3.10 per gallon.”

Partners to Profits, a franchise consulting management expert, says that it is not a simple economic issue. “I feel that many overlook the fact that it is not only gas prices that are impacted but all products that are derived from crude oil,” he says. “Plastic, vinyl, Tupperware, and clothing, this is where consumers feel the most pain yet don’t really understand the whole relationship. So, as crude oil rises and gas prices rise so will other products and this will affect almost everything we buy. Just consider how many crude oil by-products go into the interior of a car. Then consider the amount of non-cotton articles of clothing people wear. Move next into your home: carpet is produced from oil by-products. So, an increase in crude oil prices will have an enormous impact not only on American economies but will also impact the rest of the industrialized world.”

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