August 17, 2005

Gas Prices, The Energy Bill and the Credit Card Nation

Reading this article in today's NYT, I couldn't help but think about the recently passed Energy Bill, which rewards energy companies for doing exactly what they've been doing. Not only did the Congress and President not take due action, they probably made our current problems worse.

From the article:
"We spend much less," said Hollie Tubbs, a 32-year-old teacher's assistant in Brooklyn. Instead of going to the movies, watching plays or dining out, she now takes walks in the park with her husband and son and checks the newspaper to see when a nearby Barnes & Noble will be holding a free story hour. "Everything is related to gas prices. The more you drive, the more you spend. In order to bring the budget down, we stopped driving."
If consumers are feeling hard-pressed by higher gasoline prices, matters could become worse this winter when heating oil bills arrive. Some commodity analysts say that is when the full impact of the higher energy costs will be felt.
Forecasters still expect economic growth to remain healthy for the rest of the year, as companies invest in new factories and the housing boom continues. But the high cost of oil already appears to be curbing growth, translating into unusually modest gains in employment and pay.
If history is any guide, higher prices will hurt consumption, curb the nation's output and shift spending patterns. The risks of a domino effect on the economy are real, economists say.
"We can't lose sight of the fact that energy restricts growth," said Anthony Chan, a senior economist at J. P. Morgan Asset Management. "It is doing so."