It is abundantly clear that high gas prices have been severely impacting the United States populace as a whole. The cost of a single gallon of gas has reached monumental highs in every state. And the national average has already eclipsed $5. With gas prices lingering at these heights, the question then becomes how long will it last? And what can be done to fix it? According to CNN, there is a good chance that high gas prices just may fix themselves.
Numerous factors have combined to create a situation that has allowed gas prices to go haywire. However, when digging at the core of really what’s going on it comes down to an issue of supply and demand. It’s the basic economic principle that dictates what any given thing will cost at any given time. In a balanced market, supply is able to meet demand. However, If there is too much supply and not enough demand then prices will drop. The inverse of that serves to drive prices higher. Thus, high gas prices are being driven by a combination of increased demand and inadequate supply.
So how will this imbalance right itself? How will high gas prices actually fix themselves? The answer is in the effect that high gas prices have on people. The longer that gas prices stay at the heights they are now, the less and less people are going to want to drive. Of course, there will always be outliers but high prices serve as enough of a deterrent for many people to avoid driving as much as possible. Fewer people on the road means more supply will be freed up. More available supply means that demand will be easier to meet. Once that happens, the super high gas prices should begin to drop. It’s not the most ideal solution, but it is a solution. And it’s one that is rooted in the laws of probability. What goes up must come down, eventually.
Some solace can certainly be taken in the fact that high gas prices can’t stay that way forever. However, some concerns go alongside that, too. Namely, the potential for a recession to occur. Gas prices are inflated at a time when the economy as a whole is inflated. The Federal Reserve has begun to take steps to ease inflation in the form of rate hikes meant to curb spending. However, if overall spending is curbed at the same time people are driving less these factors could ultimately culminate in the emergence of a recessionary period. To be honest, a recession could happen without gas prices having a direct role, but it is still something that should be on one’s radar regardless.
Overall, right now the United States is in the middle of an economic waiting game. High gas prices will eventually fall. If everything goes according to the Federal Reserve’s plan, spending will be curbed, too and inflation will ease. Fingers crossed the US doesn’t wind up in a recession on the other side of it all.