Would creating a floor price for gasoline hurt the economy, or would it help it by curbing demand and reducing the volatility of gasoline prices?
2006-12-14 08:55:46 · 4 answers · asked by cheatsheet101 1 in Social Science ➔ Economics
Higher gasoline prices DO curb demand to some degree and even induce lots of people to buy more efficient cars. If you follow the automotive market you know that sales of trucks and SUVs have dropped like a stone in 2006 due to high gas prices.
But the answer to your question is yes, government-enforced higher gasoline prices would hamper the economy to some degree -- it is clear that in some sectors this year higher gasoline prices cut into retail sales of other things. It mainly effects productivity -- gas eats up more of a person's budget so they are able to satisfy fewer consumption needs.
2006-12-14 09:26:26 · answer #1 · answered by KevinStud99 6 · 0⤊ 0⤋
I haven't seen yet any relationship between gasoline prices and demand. People may complain, but in the end they'll suck it up and pay. That's why it's one of the moost heavily taxed commodities.
What may work better is giving people money for NOT using gasoline...maybe tax credits for using mass transit, van pooling or bicycling. Would be hard for people to provide documentation, though, without opening up avenues for cheating.
2006-12-14 09:05:05 · answer #2 · answered by Jim C 4 · 0⤊ 0⤋
Yes, in the longer run, if consumers are certain that gas prices will remain high, they will take action to reduce their gasoline costs (buy more fuel efficient vehicles, live closer to work/school, etc). But, if it were to actually happen, it would need to be put into effect gradually. Make it clear to people when it will happen, and that it will definently happen, but give them time to adjust their lifestyles, buy different vehicles, choose to live closer to a new job, etc, otherwise they will just get angry and politicans will back down, accomplishing nothing.
2006-12-14 11:22:54 · answer #3 · answered by waefijfaewfew 3 · 0⤊ 0⤋
No, it would just put one more drag on the economy. Where does the extra money come from to buy the gasoline, the goods delivered etc.
It would just shift money from other parts of the economy to the purchase of gasoline and deliver no additional benefit.
2006-12-14 14:00:28 · answer #4 · answered by Roadkill 6 · 0⤊ 0⤋