The Effects Of High Gas Prices

by Darren

For Americans, cheap energy prices have been mostly a fact of life. For years, there appeared to be no slow down for auto makers who kept on making cars (and then trucks and SUVs) bigger and bigger, with more horsepower than needed, with no thought to what would happen if gas prices were to rise sharply. Right now, a few years ago seem like much simpler times, when you consider just how expensive gas has become for many Americans.

High gas prices are causing American drivers to drive less

Gasoline started breaking records in 2007. That year, for the first time in U.S history, Americans drove less than the year before. The decline wasn’t huge at 3.00 trillion miles from 3.01 trillion miles in 2006. However, it represented the first paradigm shift from prior years which always saw more consumption than the year before. And this trend hasn’t stopped in 2008.

In March of 2008, Americans drove a full 11 trillion miles less than they did in March of 2007. With gas at $4.00 per gallon, it appears the pain has become too great for many Americans to continue to fuel up.

And what further effect has been felt from the high gas prices? Americans have lost their appetites for large cars and have gained a taste for hybrids and energy efficient vehicles. GM and Ford are both mulling over severe cuts in Truck and SUV production as less people are thinking big than ever before.

Furthermore, the high cost of gas is felt by just about everyone and every sector. Higher fuel costs add to the prices of other items, causing a double-whammy effect on people’s budgets. As gas prices rise, people are cutting back elsewhere.

Does the cloud of high gas prices contain a silver lining?

Generally when things seem as bleak as they do with high gas prices, it’s tough to come up with the positives. But in the case of high gas prices, it’s exciting to think that American consumerism is probably at a turning point as people are generally spooked over a commodity they rely on costing so much money.

The only time a paradigm shift can occur is when the pain of doing things the same way as usual becomes to great. And that’s the point the country is at when it comes to high gas prices. People don’t want to, or can’t, allow themselves to pay any more money for fuel and it’s causing them to educate themselves on incredibly important issues that are facing us all.

Right now the rush is on to satisfy consumers by offering more hybrid and eco friendly cars, as well as to really come up with ideas that would move the country away from the potentially devastating addiction to foreign oil. Without major pain for Joe Consumer, it’s doubtful such interest would have manifested in such a short time. But the high gas prices are here and they appear to be staying.

For all of us, we’ll need to decide how we’ll deal with these skyrocketing prices. As more and more of us choose to drive less, the drop in demand should strongly signal to oil speculators that the bull run is over. Hopefully once the gas prices do return to a lower level (if they do), the painful lesson of the last few years will be learned.