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When oil prices began their big surge about a decade ago, doomsayers immediately began bloviating about how rising gas prices were going to put the smackdown on the economy.But as gas prices blew through milestone after milestone–$2, $2.50, $3, $3.50–this fear proved completely unfounded. The economy kept cranking right along.
Right up until the moment gas hit $4 a gallon.
Then everyone freaked out.
When gas blew through $4, the car companies all suddenly started talking about how it was a new era and they were going to completely redesign their fleets, etc.
And, seeking to defer blame for doing nothing to build up alternative sources of energy for the 30 years since the last oil price spike, Congress immediately blamed “speculators” for the price spike–ignoring the fact that global oil demand had gone through the roof with the growth of China, India, et al.
Then the global economy crashed and oil prices tanked and everyone forgot all about them.
But now oil prices have surged through $100 a barrel again.
And now gas prices are, once again, nearing the magic $4 a gallon freak-out point.
So it is indeed going to be interesting to see what happens this spring, if the global economy keeps recovering. But it’s not hard to imagine that gas prices could blow right through $4 and head all the way to $5 or $6.
And that really might begin to act as a brake on the economy.
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