Why the Price of Gas Has Such Power Over Us
The price of gasoline, which used to be half a dollar a gallon — sometimes much less — is now three cents a gallon. This is the highest in at least a century. The price of gasoline is directly associated with a number of factors — from the growth of the United States to the price of other goods and services. The fact that the price of gas is so high is directly linked to the fact that gas cars run 20 percent more efficiently than other cars. A new study finds that when the price of gasoline is high, people are more likely to buy and use fuel-efficient cars, and that makes it harder for the economy to recover. “This is one reason why the cost of gas is so important,” said Peter K. Schuck, a professor of economics at the University of Chicago. “It’s one reason why low gas prices are so important, and that is because low prices are one of the biggest things holding back an economy.”
The Economic Recovery Index, or ERI (an acronym for Energy-to-Indicators: Energies, Industries and the Economy), is a survey of American consumers and businesses that measures a broad range of economic indicators, including the cost of electricity, transportation, goods and services. The ERI was devised by Dr. Schuck and his research team. It was developed specifically for the study of the impact of the price of gasoline on the American economy. The ERI was created to monitor changes in the consumer’s purchasing power, with the first round of results issued in 1974. The results from the first round of surveys were published in 1995. The next round of surveys was conducted in 2001. Results from the latest round of surveys were published in 2006.
Schuck said the ERI has a number of advantages over other surveys that measure the cost of goods and services. “What the ERI measures is the net aggregate real change in what people buy or receive in a given category in a given time frame,” he said. “So it’s sort of a comprehensive measure of how the economy is doing. It’s not just an indicator of how people are spending, but