The threat of impending war with Iraq could cause the already soaring gasoline prices to reach record levels. Around the nation, gas stations have raised their prices approximately 50 cents higher than they were at this time last year, despite the recent decline in crude oil prices because of tight inventories, seasonal pressure on refiners, and high demand. The average price of self-service, unleaded regular gasoline is at just under $1.75 a gallon, according to the Automobile Association of America. Here in Falls City, each time we drive up to a gas station, it seems that the prices have risen again. This rise in costs has caused many to drive less and less, just to places that are absolutely necessary, like occupations. .
With the summer months approaching, starting the peak season of major gas usage, some people are going to be forced to cut their vacations short or not go as far if they will not be able to pay all the money that is needed to fill their gas tanks. This in turn can hurt the economy because the vacationers spend less money on their vacations due to the shortened trips. This not only will hurt the economy during vacations and summer, but all the time. If people cannot afford to pay the money for gas to get to places, they will be forced not to go. The money that they would have spent that would have gone to the economy would be kept. .
There are numerous reasons for the price spike at the pump, but the main culprit is the scarcity in the overall supply of oil. Considering how a great deal of our oil comes internationally, and with our suppliers in South American striking, the United States has greatly felt the effects. Iraq, with the world's second-largest proven oil and gas reserves, is the ninth-largest exporter to the United States. Concerns about the possible loss of Iraq's supply due to the war have affected the price of gasoline because on future markets, oil prices rise on fears and perceptions, not just on supply and demand.
