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The effects of high crude oil prices are insidiously working their way through the world economy. Because oil is at the core of almost everything we do; any dramatic price shifts are almost immediately reflected in major product segments. From airline ticket prices, to tires, from the price of a grape fruit to a three pound can of coffee. Even the price of electricity is impacted by higher petroleum prices.
While companies, governments and individuals all share the same pain from higher oil prices, ultimately it is the individual who pays for all of it. Companies are owned by individual investors, government is funded by individual taxpayers, and it is the individual consumer who buys the products and services marketed by companies. So, in the end, high oil prices are all about how it impacts families and the individual consumer.
How does the average American react to these dramatically increasingly gas prices?
The answer depends on whether the increases are sustained over a long period of time, or if it is a short-term spike.
Unfortunately, our current round of ever-higher crude oil prices seems to be a sustained, long term trend. The available evidence suggests that we need to adapt to the higher prices. Individually we are going to have to make many changes in our appliances, transportation, and housing to cut costs while maintaining the standard of living we all want.
In many cases, technology will help us cut our energy consumption through new efficient designs. Other techniques, such as a recirculation pump on our hot water heater will also help us save energy and thereby save money. It is unlikely that there is one big thing out there that will be the total answer to conserve our energy needs; more likely it is going to be a collection of small savings here and there that add up to big savings for the individual.
Individual conservation is an important part of the solution to this complex problem that is on our hands. Public Policy is also an equally important factor. Part of the reason we have this problem is because we need to increase domestic supply and distribution. We should all know by now, that to solve, or better these problems, can only come to fruition if we all work together.
