Fuel and Economy the Price Term Paper

Pages: 5 (1480 words)  ·  Bibliography Sources: ≈ 18  ·  File: .docx  ·  Level: College Senior  ·  Topic: Energy

According to Brad Sorensen, an energy analyst at Charles Schwab, "oil prices will soon push up the costs of a broad range of consumer goods ... It will cost more to produce the goods, and more to transport them ... sooner or later they'll pass the costs to the consumer" (Schoenberger pp). And express mail services have been forced to add surcharges to offset the price of jet fuel (Schoenberger pp). UPS spokeswoman, Susan Rosenberg, says the impact of rising oil prices is not an isolated U.S. issue and may impact global trade (Schoenberger pp). John Greenagel of the Semiconductor Industry Association, says according to a recent report, "the average American household lost $749 in discretionary income because of rising gas prices from January 2004 to March 2005," and that translates into $24 billion in lost electronic sales and nearly $5 billion in lost semiconductor sales (Schoenberger pp). Moreover, because petroleum is the key ingredient in plastic, that industry has been hit hard as well (Block pp). Energy prices not only affect the products that are made with oil, but everything that is trucked, shipped, or flown (Block pp). Goods have to get to market, people to get to retail centers, and tourists have to travel, the cost of oil affects the price of every commodity on the store shelves (Emerson pp).

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Federal Reserve Chairman Alan Greenspan and other economists are concerned that higher energy prices could spark inflation and sap economic growth (Schoenberger pp). The Zambian Energy and Water Development Minister, George Mpombo, said that the Zambian government agrees with the International Monetary Fund that escalating oil prices are stifling developing economies, especially African economies like Zambia (Zambian pp).

Term Paper on Fuel and Economy the Price Assignment

The first week in April 1005, The Energy Department projected that the high gasoline prices and $50-plus crude oil to last at least through next year as producers struggle to keep up with demand (Hebert pp). The department said it expects gasoline prices to average $2.35 a gallon nationwide by May, just in time for the heavy summer driving season (Hebert pp). During the first week in April, motorists were paying an average of $2.22 a gallon, 44 cents more than a year ago (Hebert pp).

In places such as New York City, the Iraq war's ripple effects have completely changed the way they do business (Marshall pp). Says one business owner, "A driver who was able to make 15 deliveries day is now making 12 or less," a loss directly attributed to the additional security (Marshall pp). And as the price of oil continues to rise, largely due to the ongoing violence in Iraq, many industries are forced to pass the costs on to clients as a fuel surcharge" (Marshall pp). In fact, aside from defense manufacturers or suppliers, there are few businesses that have benefited from the Iraq war (Marshall pp).

Iraq under United States occupation is the site of an intractable guerrilla conflict, resulting in the country's oil facilities being under continuous attack, and as the price of oil rises, America faces the daunting prospect of paying for its fix of imported energy in shrinking dollars (Gray pp),

There is virtually no industry or business that is not affected by the rising oil prices, from consumer goods to tourism to transportation. Higher gas prices mean hikes on goods which in turn means consumers will buy less, and moreover, they will travel less, thus affecting tourism, such as hotels and restaurants. However, according to most experts, there is no relief in sight.

Work Cited

Gray, John. "Books: Goodbye globalisation? The World Is Flat."

The Independent (London, England); 4/29/2005; pp.

Marshall, Randi F. "War's ripple effects set city businesses back."

January 27, 2005


Hebert, H. Josef. "Feds expect fuel prices to climb higher." April 7, 2005; pp.


Emerson, Jo Ann. "Oil for the Rural Economy." June 5, 2004; pp.


Block, Melissa; Norris, Michele. "Analysis: Impact of higher oil prices throughout the economy." All Things Considered: National Public Radio, NPR. 4/7/2005; pp.

"Zambian government to subsidize fuel price."

Xinhua News Agency; 4/18/2005

Schoenberger, Karl. "Fuel prices drive truckers to desperation."

San Jose Mercury News (San Jose, California); 4/15/2005; pp.

Maynard, Micheline. "U.S. airlines' misplaced hopes on fuel prices."

International Herald Tribune; 4/27/2005; pp.

"Bush worried about economy due to higher energy prices+."


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