Friday, March 11, 2011

High Gas Prices Affecting Restaurant Business

The difference between higher gas prices in America and in say, Europe, is that Europe has an infrastructure that is designed partially around high energy prices.  Gas may cost more there, since it's more heavily taxed, but the tax goes to subsidize forms of public transportation.  Additionally, European cities are much more walkable than what we have here; in some towns, it's almost inpractical to drive since they aren't designed for cars.  So, if you're a car driver in Europe and gas prices go up to a level that you're not comfortable with paying, you can always switch to public transit, or even bike or walk if your job is close enough. 

Not so here.  Since America's infrastructure was centered around the automobile, and public transportation is often neglected (if not outright eliminated in some parts of the nation), and people often live long distances away from where they work, they have no choice but to drive, no matter how high the price of gas goes.  So, since they can't find work-arounds around their driving dilemma, they'll just have less disposable income for other things, like eating out.  This will have a ripple effect on the economy, since it affects consumer spending, which drives most of our economy.  Unless gas prices drop soon, I don't think we have long to wait before a repeat of '08. 

BTW, although I usually dismiss speculation as a large part of our soaring energy prices (and I might be wrong to do so), I do think it is playing a big part in why our energy prices are rising right now.  Long-term, I think we face a dire situation when it comes to energy, but this current situation is being driven by speculation that there will be further unrest in other oil-exporting countries, specifically the largest, Saudi Arabia.  There doesn't seem to be a shortfall in production, and demand seems to be being met.  As one peak oil proponent has put it, this time in history won't be defined by continually rising energy prices, but voliatile prices, in which they will continually either rise or drop, and often dramatically. 

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