The cost of oil

Calculating a plus 1.25 price
per gallon of gasoline you get a roughly half a trillion dollars per year is shifting. In the past this money simply left the economy, however, as the USA produces a lot of oil this money just moves to different pathways in the economy.

Still, it will slow down money going into cars, remodeling eating out and other stuff. Additionally due to mechanisms I still do not understand, natural gas will go up and this will impact both heating and electric bills. This also draws money from goods and services that are not energy related.

Adding in other impacts such as interest rates increase and food costs rising due to food shortages due to food losses in the Ukraine. Adding all this together and you can see a 0.5 to 5 percent negative impacts on the economy.

The larger of these is a recession. The lessor would be a relief in some senses, but even a small impact may be felt a lot due to the changes in money pathways in the country. Think a slow down at Home Depot and Lowes.

Cheers
Qazulight

3 Likes