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Essay / Research Paper Abstract
A 6 page paper that discusses the relationship between high gas prices and the economy. The paper demonstrates how increases in the price of crude oil affects the price of oil products as well as other products and how consumers react in terms of buying habits. Data included. 2 charts and 1 table included. Bibliography lists 5 sources.
Page Count:
6 pages (~225 words per page)
File: ME12_PGhigsec.rtf
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Unformatted sample text from the term paper:
that gasoline prices have soared by about one-third in the past year. Prices increased by over 19 cents in the last week of February 2011 (Finnegan, 2011). When prices increase,
consumer spending dips. This is a natural law of economics. Purchasing power is based on two factors - income and prices. When prices rise and income remains the same, consumers
have less purchasing power. If a consumers income increases, he will have more purchasing power. It is called the income effect (Investopedia, 2011). Carr (2011) reports that an increase
of $1.00 per gallon of gasoline translates to about 2 percent of the average American familys income. The increase of 52 cents over the past year is equal to about
$550 dollars for that average family (Carr, 2011). That is almost $50 per month that family does not have. They would have spent at least some of that money on
other items, which would strengthen this weak economy. Some reports suggest that the average American buys 525 gallons of gasoline per year. Of course, this is an average from
the Bureau of Transportation Statistics (Carr, 2011). Still, it is clear that if gasoline prices continue to rise, consumers will have less and less money to put back into the
economy. Consumers have to cut back. They pay for the higher gas prices by not doing something else. For instance, a family that must maintain its driving habits to work,
school and shopping may decide to eat out less often in order to have the money to pay for the gasoline. This is reflected in this chart: Economists have
pointed out that the higher gasoline prices have eaten up some of the extra cash workers are seeing in their pay checks. The federal government reduced social security taxes by
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