High Gas Prices Are Working
April 26th, 2006 by Grant in: Economics
No one likes to pay more at the pump. But the economic principles dictate that if you don’t like paying more at the pump, don’t go to the pump.
The high gas prices in my area are taking the desired effect; consumption is going down, and the number of people riding the bus has gone up 7% as compared to this month last year.
President Bush recently decided that he’d forgo additions to the stretegic oil reserve until the fall, due to pressure from his peers to do something about high gas prices. In addition, he is asking the EPA to grant waivers for clean air requirements on a local level.
Isn’t this working against the problem? Artificially driving down prices by redirecting supply and waiving clean air policies maintains demand at its current levels while supply is only temporarily increased.
So how does this help fix the problem?
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July 24th, 2006 at 12:30 pm
High gas prices may be working, but they’ve got a lot more to do before we see prices go lower. I don’t see how demand has gone down, even when prices are above $3 per gallon in the majority of the country.