kane

I really think if we reach around 8-9 dollars a gallon you will see this country spiral into a major recession. We have built our society around cars and need them to survive. If you commute 40 miles round trip to work (that is a pretty average number) and your car gets 18 miles to the gallon that is around 11 gallons a week. Right now you pay around $44 a week to go to work. When that number gets up to around $90-$100 per week people will freak out. The average household in the US makes around 45K per year before taxes. The average individual makes around 33K per year before taxes. Paying $100 per week in gas is going to hurt a lot of people badly. Most of the strength of our economy (last I heard around 80%) comes from consumer spending. When they have to fork over that much just to get to work they will stop buying other things.

And this is just the cost of getting to work. The other day on the news they said the cost of food is projected to rise 9% per year until 2012 because of fuel costs. This mean in 4 years food will cost around 32% more than it does today. The cost of just about everything is going up because of the cost of fuel. So you will pay more to go work and feed your family which means you will have less to spend and when people stop buying shit they don't knee the economy goes into recession. The hard part of coming out of a recession like that is that it will require the average person to actually make changes to their lives and that is not an easy thing to get people to do.