New US Economy Policy Message Board

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Strategies & Market Trends : New US Economy Policy

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From: Arthur Tang	6/17/2007 2:18:49 PM
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The effect of gasoline price on the US economy, can be seen from 2005 to 2007. $3 per gallon is bad, $2 per gallon is good. The difference is how many miles, people will drive to small stores and restaurants. Which is the casualty of bad economy in local business. Since gasoline price is highest generally in the summer. By October, the small businesses will close; they survive hand to mouth and a few weeks of lack of business will be forced into bankruptcy. US typically have 18,000 bankruptcy each year; high gasoline price will have more bankruptcy. So, when we adjust the gasoline price back to $2; small business came back. The effect is fairly fast. The wish is adjusting the federal, state and local gasoline tax revenue, which is the larger part of the gasoline price. Base price is about $1 per gallon(Feds collect 35 cents). markup at the pump is about 10 cents, and the rest(if more than $1.10) is shared by governments collecting gasoline tax(state and local 50 cents, feds another 50 cents or 65 cents). Gasoline companuies got extra $10 billion profit; Feds got close to $1.2 trillion tax income.

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