Wednesday, August 10, 2005
Does Oil Matter?? Are gas prices REALLY high ?
Does the current "high" price of gas matter ? The answer is NO. In fact, gas prices are well within their historical ranges.
In the 1980s, 20% of our gross domestic product was oil related. Today, that figure is less than 7%. If oil prices climb somewhat, we can expect that figure to remain about 10%.
What people forget of late that aside from the mitigating factor of the Iraq war, demand from India and China really is driving current oil prices. Possible instability in Sadi Arabia is also another factor.
It is probable that we "play nice" with Mexico because we increasingly import more oil from them as the chart above indicates. But clearly, the economy is moving away from being very much oil based.
