What do gas prices affect

In other words, higher gas prices drain purchasing power from the economy. That means that these families get hit twice: once by the direct impact on their household budgets but a second time when higher prices retard the economic recovery. Hamilton finds that they slowed GDP growth significantly, often enough to tip the economy into a recession. Goldman Sachs estimates that just the oil price increase since December will shave between a quarter and a half of a percentage point off of real GDP growth over the next year, and the effects could be more dire if oil prices continue to rise.

To be sure, in the longer term, consumers will adjust how much they drive and how much they spend on gas in response to higher prices at the pump. Research suggests that in the short term — less than a year — the so-called price elasticity of demand for gas is about In the long term, the elasticity is closer to Actively scan device characteristics for identification.

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When the prices of competing fuels rise relative to the price of natural gas, switching from those fuels to natural gas may increase natural gas demand and prices.

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