This is Mary Walden with economist MW, welcoming you to the economic perspective. Today’s program asks if higher gas prices will derail the economy. Mike, every time gas prices jump, there’s a concern it will cause the economy to slow down – and perhaps even go into a recession. Given the recent rise in gas prices this year, is there the same worry about the broader impact on the economy?
- Certainly a concern, but I think less of a concern for three reasons
- First, unlike in the past when the US imported a large % of its oil, today we are virtually self-sufficient in oil production
- So, unlike the past when higher gas (and oil) prices meant more money leaving the country, our domestic oil industry benefits from those higher prices
- Second – we don’t use as much gas today per person – down about 7% from a decade ago – due to better fuel efficiency and increased use of hybrids and electric vehicles
- Third – most analysts think the supply restrictions agreed to by Saudi Arabia and Russia will be lifted in the fall – meaning gas prices will fall then
And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.