| Oil and the Economy |
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| Where do we stand on future gas prices? Will the election affect our gas prices? What other options does the United States have? Will nuclear power play a bigger role in the economy? ...In 2000, the oil industry's capital expenditures topped $56 billion in the U.S. alone. ...Florida received $2.4 million in revenues collected from offshore oil and gas production, by the federal government, in 2000. ...Our nation's most important energy source is oil, and the United States imports 60% of it. MACRO-ECONOMICS: To answer the question of future gas prices and the effects it has on our economy, would be to look at the present time, first. Merrill Lynch has estimated that for each penny more we pay in gas, $1 billion will be lost in consumer spending. We have reached all time highs, and the Energy Department officials expect a new record. Virginia, North Carolina, South Carolina, Florida, Mississippi, California, and Nevada are some of the highest reporting states, reaching over $2 per gallon. Economists feel the higher energy prices of gas and oil will slow our economic growth overall. Consumers and airlines are feeling the greatest impact of higher oil and gasoline prices. Mark Zand, Chief Economist for Economy.com, believes a half-point will come off of GDP by the end of the year. How can technology help? It could increase the fuel economy of the average car over the next 10 years. The hybrid car can run on electricity, and thus reduce the need for foreign oil. If the United States doesn't develop improvements in fuel efficiency then the dependence on foreign oil will continue to increase. The future competitiveness of nuclear power depends on the cost of coal generated plants. Nuclear power will remain competitive unless volumes of gas become available at lower costs, with long-term contracts in place. President Bush spoke at a recent cabinet meeting on the energy plan. He blames congress for not taking action. President Bush submitted an energy bill three years ago, and feels our economy would be in much better shape if it had been acted upon. What about the election? Oil prices are a major political aspect being discussed. President Bush said he will not play politics with the Strategic Petroleum Reserve; however, time will tell. The election is a little over three months away, and gas prices are reducing. |
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