Yep, gasoline prices are somewhat inelastic and the gov’t takes advantage of that with taxes. They stand to benefit from higher gasoline prices. Obama also wants to push his green initiative and wants to make it cheaper than gas for that reason. It’s about $4.20 here in So. Cal and at these prices, they are Obama’s wet dream.
” Econ 101 reminder: “
High School Econ reminder: “Opportunity Cost”, which observes simply that money spent on one thing can’t be spent on something else...
In a quick search, I came up with a figure of roughly 140billion gallons of gasoline consumed in the US in 2009 (unclear if this includes Diesel and other Petroleum motor fuels - but for the sake of this demonstration, it’s close enough)...
Raising the price of gasoline by 10cents means that $14 billion is no longer available to be spent on other things - and then ya have to figure in the ‘multiplier effect’ that increased production and transportation costs causes in the price of food, and everything else....
So, a 10cent raise in gas prices may not feel like a big deal when you fill your tank, but it’s a significant hit to the economy in toto....