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Essay On Rising Gas Prices
Rapidly rising gas prices have become a major concern all over the world, particularly with electricity prices also rising. Both producers and consumers in the have experienced large jumps in costs, prompting some businesses to close temporarily and many consumers to reduce consumption and conserve.
For agricultural producers and many non-high-tech manufacturers, the price increases have been particularly difficult. Gas is an important component of production costs in agriculture: It is used for fuel to heat greenhouses and to run food processing machinery, and it is a major input in the manufacture of fertilizers and pesticides. As a result, many farmers in the District have experienced significant increases in costs, with some finding it more profitable to idle their production and/or fields than to produce under current conditions. Some manufacturers are in a similar situation. Chemical makers, paper processors, brick producers, and food processors have decided to discontinue operations until gas prices improve. For manufacturers with forward contracts for natural gas, it is increasingly more profitable to resell this energy than to produce their products.
Although rising gas prices have hurt some producers and consumers, there is little evidence that rising costs have significantly slowed economic growth in the region. The lack of more widespread effects is not particularly surprising. On a per capita basis, western states consume less energy than the rest of the U.S. Gas accounts for only about one-quarter of all energy consumed in western states and, on average, expenditures on natural gas in District states amount to less than 1% of gross state product (Dolton, Gautier, Mast, Root, 495).
Thus, even if prices remain high for most of the year, the impact on the economy, measured by its share of gross state product, will be less than the Asian financial crisis in 1997. Finally, unlike electricity markets, markets for natural gas are relatively unregulated and generally well functioning......
