Research from the World Economic Forum indicates that economic growth and recovery is strongly correlated with a stable energy sector.
Considering the financial impact that gasoline prices have on Americans and the current economic climate, TAP Management and other domestic oil producers are doing their part to reduce the financial burdens caused by spiraling gas prices.
According to the New York Times, the typical American driver consumes 60 gallons of gasoline each month. When gas prices increase, the amount of discretionary income that consumers have is reduced.
For instance, a 50-cent price increase equates to an additional monthly expense of $30 for every American driver – a yearly increase of $360. This figure is compounded in households that have multiple drivers, and adversely affects the amount of money households can redistribute into the economy.
When gas prices climb, especially over $5 per gallon, evidence suggests that the stock market also suffers. Commodity strategist John LaForge of Ned Davis Research reported that a price increase of 33 percent or more during a six month period results in a weakened stock market performance – a situation that United States has encountered recently.
Furthermore, stocks for airlines, freight carriers and other companies that rely on gasoline are also negatively affected because they lack sufficient pricing power to offset the increased fuel costs. Therefore, as stocks fall, the market and individuals’ portfolios are affected similarly.
Combined data from the Energy Information Administration (EIA) and U.S. Department of Labor shows that there is a strong connection between gas prices and the unemployment rate. When gas prices increase, the unemployment rate also rises sharply.
The spike in fuel prices that Americans have encountered recently has caused a great deal of uncertainty regarding the unemployment rate in 2012. However, experts suggest that the national average will hover around 9 percent this year.
Considering the dire effects that rising gasoline prices have on our national and global economy, providing a stable, long-term energy solution is critical. TAP Management, and companies that share a similar focus, are dedicated to improving the quality of life for Americans.
Increasing the domestic supply of oil will ensure lower gasoline prices for consumers, reduced operational costs for manufacturers, thousands of jobs for Americans, and a more timely economic recovery.
TAP Management Inc. | 515 Congress Avenue, Suite 2525 | Austin, TX | (512) 527-6000