The saying goes, “Those who cannot remember the past, are condemned to repeat it.” I think this bears major contemplation as our gasoline prices top $3 a gallon with virtually no one talking about it as if it has any major impact on our daily lives. Each time this happens we get the typical stories about griping and people dealing with it in various different ways. What we don’t get is a sense of major urgency about its real underlying impact.
However, there are much deeper issues here if we simply remember what happened the last time gas topped $4 a gallon:
1. Transportation-based economies ground to a halt. Airline fares skyrocketed and travelers started canceling plans including businesses canceling trips to conventions, etc.
2. People canceled vacation plans and stayed home. The skiing industry was hard hit by this as many skiers live a decent drive away from their closest mountains. An already expensive outing suddenly was out of reach.
3. Those of us in the Northeast that heat our homes with oil were very hard hit. I just paid $350 for 100 gallons of heating oil that will last me all of two to three weeks. If gas hits $4 a gallon, heating oil will be nearly $5 a gallon. That’s a major blow to any income for the entire winter and early spring season. I’m looking at over $3,000 to heat my home this winter. Not that long ago it was $1,000.
The biggest impact all of this had was on consumer spending. The last time this happened it dried up entirely which then cascaded into lost jobs, lost income, lost confidence, the market crash, etc.
Yes, I realize there were other factors but this one, in my view, was a major (if not the major) factor in our falling into recession. People need to remember that it’s not just a factor of people finding other ways to work or to get around in general. It affects many other areas that simply cannot be easily adjusted. I can’t just change the way I heat my home in any way that won’t cost me a fortune. My only real option is to move. Not exactly a great answer.