Summary
This article talks about recessions usually bringing down prices, but the price of gas in the economy today is still rising. “[I]f oil costs this much now, when demand is low and supplies are high, what happens when the economy improves,” the author asks, “Another record-setting spike? Gasoline rising back above $4 a gallon?” Many oil traders are thinking the recession is at or near its worst, which means the economy will improve soon, maybe later this year. Because people are scared of the prices increasing, countries all over the world are signing a bill to regulate the use of oil. People can reduce the oil they use by walk, biking, or another alternative, instead of driving.
The prices are clearly rising due to an increase of supply and a decrease of demand. People are starting to find alternatives to driving because they are unwilling to pay for gas. If people are unwilling to pay for gas at this price, who would pay for gas when the economy recovers, when prices raise. The price of gas is generally inelastic because people have to buy gas, or not use an automobile at all; usually people who use gas don't stop just because of the price increasing, they might use less, but not completely stop using it. Because oil companies are increasing their prices, the prices of cars may drop because the two products are complementary.
Reflection
Because of the expensive prices for gas, I believe that people would walk more, or find another alternative to driving. If the prices keep rising, people would be forced to walk or use public transit for a while, until the prices drop to a reasonable level again. Also, if everybody stopped using gas, the oil companies would have no choice but to lower the prices; this would help the environment as well. I think the global bill of reducing oil use is a good idea because it would obviously help the environment, and help people save money.
