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What’s less clear is the impact on the economy. We tend to forget that when prices of a basic commodity go up, someone’s making money. In the case of refined gasoline, these are primarily American products. Yes, it causes pain for some consumers — the ones who use their cars a lot — but it doesn’t hurt the economy in that the increased prices are going into the economy itself. (Rest assured that when prices decline dramatically for other products — steel, for example — someone certainly is getting hurt. Steelworkers, for example.)
There’s also the question of the real impact on individuals versus the perceived emotional impact, largely a result of the energy crises of the 1970s. According to the Bureau of Labor Statistics, gasoline accounts for about 4% of household spending. That’s less than the 6% people pay to eat out, 6% for medical care, and another 6% for recreation. Four percent is a lot. However, if that ticks up a point or two it will not, on average, hurt the economy or individuals within it.
It’s well known that Americans have enjoyed cheaper refined gasoline than the rest of the world for years. It’s a lifestyle choice to own a big car and to live in a big house far from the city center. Pointing this out is not meant as a value judgment. People who consume a lot of gas aren’t bad. (I’m a card-carrying SUV owner.) It’s just their choice. Higher gas prices may alter those choices. It won’t kill the economy.
Adam Lashinsky (firstname.lastname@example.org) is a senior writer for Fortune Magazine and a regular FOX News contributor.