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Energy Crisis

Gas prices have become uncontrollable and though it is not directly the cause of the United States (US) economic recession, data indicates the increased spending of American citizens on energy is affecting the economy.

Gasoline prices are at an all-time high and even after adjusting for inflation rate, increased income and improved fuel efficiency, experts still say the US is still in bad shape (Hargreaves, 2008). On one aspect, it is not only the US that is experiencing this kind of energy crisis. Almost all countries are having problems because of escalating oil prices which urged nations to find alternative sources of energy such as biofuels.

Compared to its state a few decades back, the US economy has improved and salaries have increased. Some even point out that gasoline is cheaper in the US compared to prices in Europe.  However, some argue that while that is the case, higher gasoline prices in Europe may be attributed to higher rates of taxes which are used to fund government services such as mass transit and cheaper health care (Hargreaves, 2008).

Food prices have also risen because of the economy. This is as a result of hedging techniques against rising inflation rates and the falling dollar

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(Hargreaves, 2008). Aside from the rising cost of basic transportation, the cost of the transport of goods also increases which also affects the price. Many industries that make use of oil in the production process are also affected by rising oil prices. The consumers are feeling the effects of the rising price of gasoline for their vehicles as well as the additional burden of the increase in the prices of basic commodities.

To somehow cushion the effect of escalating oil prices, the government could lower tariff taxes for oil and even totally lift it to greatly reduce oil prices. However, this should be done with utmost care as this could affect the amount reflected in the national budget. If this is not feasible, the government could advance projects that would provide better and cheaper means of transportation for people and for the transport of goods.

References

Hargreaves, Steve. 15 March 2008. Cable News Network. Retrieved March 30, 2008, from             http://money.cnn.com/2008/03/11/news/economy/gas_prices_inflation/index.htm?postversion

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