johnnymk

I know that the last time fuel prices doubled in 1979, the following several years was followed by high inflation. However, back then the Fed was raising interest rates once a month and workers were demanding COLA in their wages.

Even if the Fed doesn't raise interest rates and workers wages stay put, the cost of goods has to accelerate. Fuel is required in trucks for shipping, to manufacture whatever is being built in America and globally, in certain chemicals, fetilizers, etc.

Plus, I would tend to believe that the cost of travelling would be up, whether in a car, SUV, trailer or by air, and could seriously affect many vacation hot spots.

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Airencracken

I have to believe this is going to be the case unfortunatly. However, the only good thing that may come out of this is the reduction in sales of high displacement SUV's and other gas guzzling vehicles. Those damn things create artifical Gasoline demand. Hybrid all the way baby!

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zippyjuan

Actually energy costs are not very high right now. In real terms (allowing for inflation) prices are lower than they were in the 80s. I think rewarding companies with tax breaks for leaving the country will have a larger impact. Job creation, while finally starting to improve, has been dismal and is the key to improving the overall economy- giving people money to spend on good and services. Bush's tax cuts mostly went to those who would not spend most of it and that is why it has not given much stimulus to the economy. The soaring budget is what will cause interest rates to rise and send things backwards as the government has to borrow more money and pay higher rates to do it. This happend after Reagan's tax cuts as well. Clinton and most governors squandered their surpluses by cranking up their spending rather than putting some aside for a rainy day.

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ShawnLee

I was thinking about this. Aren't the profit margins on SUV's so high that they pay for the cost of small little cheap cars and the R&D on newer technologies like hybrids?

I could be wrong, but I think that's the conclusion I came to when I studied this a couple of years ago.

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