BACK TO HORSE AND BUGGY?
By Valerie Lunden, MA

Over the Labor Day weekend, gasoline prices in certain areas of Georgia hit the $5 mark (according to the front page of USA Today). A friend in Georgia expressed dissatisfaction with this situation and sent out a terse E-mail directed at the state governor and the federal government calling for action. In contrast, that same week another friend in California distributed a chain E-mail of gasoline - related comics. It seems that the topic of gasoline has the attention of some Californians, but perhaps not in the form of a call to action.

Unlike many countries that impose government taxes on gasoline (article link provided), the United States cost per gallon as a whole is relatively inexpensive. For example in England last week the average gas price was £0.95/litre (they have metric over there). This converts to approximately $6.79/gallon, more then double what consumers pay in the United States.

To bring home just how drastic this situation has become, in the year 2000 average gas prices in the U.S. teetered at around $1.64 and a 4-pack of toilet paper at the grocery store cost about eighty-nine cents. Today, the average gas price nationwide hovers at just above $3.10 and the price of a 4-pack of toilet paper costs $1.69
Between 2000-2004, the government supported two forms of indirect fiscal relief, with the intention of putting money back into consumer pockets. The first was lowering the tax bracket (we all pay less personal tax). The next incentive came in the form of low interest rates. Low interest rates affects mortgages and rents and help make car ownership more affordable. In both cases this sort of government generosity also impacts how much more money we have to save. Although on the outset this appears to be a positive financial boon, any gas price increase literally obliterates any savings because consumers ultimately pay for price increases. The main reason is that goods imported to the U.S. cost more, (because manufacturers and retailers have to transport them here and that takes gasoline).

According to the Census Bureau, the U.S. imports more than 68% of its raw goods and materials. This not only affects the cost of Japanese and German cars, but also all raw materials that go into making anything from soap to, yes, toilet paper.

If this isn't bad enough, to meet revenue projections American companies will have to charge more for their goods and services, and this could lead to fewer sales, less profit and the inevitable, downsizing.

It is reasonable to suggest that when increased inflation comes (which it will), we are all going to feel the pinch in our pocketbooks and wallets.

A gas price increase is a matter to take seriously. As citizens we should worry, react, and talk to our friends about gas price increases, and tell them, (if they don't already know), why this has become an important and desperate situation.

Perhaps the federal government should impose an annual gasoline price cap, and if the price exceeds the cap, well, they should pay the difference - not us!