Gas Prices

Gasoline (colloquially called “gas”) perhaps unsurprisingly has a direct impact on car sales and driving behaviors, especially in car-happy nations like the United States.

Somewhat more surprising is that gas prices have also been shown to impact the economic outlook of a population; again, especially (though not exclusively) in nations that rely heavily on gas-powered personal vehicles.

Research has shown that when the average price of gas goes up in a given country, that country’s Index of Consumer Expectations (which tracks how upbeat people are about their economy’s future prospects, which in turn can influence spending and investing habits) trends down. The opposite doesn’t seem to be true, however: when gas prices go down, there isn’t a reliable upward swing in the ICE in the short-term, that figure only rebalancing over time.

This relationship often shows up in nations that are less reliant on gas-powered personal transport too, though, in part because so much of the global economy is powered by petroleum products. So when fuel prices increase, the cost of goods (of all kinds) also tend to increase (inflation), because the cost of shipping those goods (and in some cases, producing them and keeping them from spoiling or otherwise going bad while being stored and shipped) goes up.