How to Deal with High Oil Prices

In: Business and Management

Submitted By carll
Words 305
Pages 2
How to Deal With High Oil Prices
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Global oil industry faces a threat, which primarily originates from escalating oil prices. An increase in oil prices causes a tremendous negative impact on the growth of major developing and developed economies due to its direct effects on the transportation industry thereby affecting mobility of goods and people (Bacon & Kojima, 2006). At the core of the policy response concerning which party should deal with high oil prices numerous parties are considered. These parties are users, businesses, government, and the taxpayers. In response, to escalating oil prices, the government should establish a constant maximum limit of subsidized consumption for each family. Oil subsidy enables government to regulate fuel consumption, which alters the forces of demand and supply thereby obtaining an optimal oil price level. On the other hand, users deal with high oil prices by avoiding the use of personal vehicles unnecessarily. In this sense, users are obliged to use public means of transport, as exceeding the maximum subsidized value leads to a premium rate. In addition, the taxpayers could deal with high oil prices through use of efficient vehicles. Some of the efficient cars have a higher mile to the gallon of gas, which leads to relatively low consumption of gas coupled with less carbon emissions. Improved fuel efficiency offsets the negative impact of higher oil prices on economic growth. Consequently, with high oil prices becoming a reality, the taxpayers’ community would consider fuel efficiency an essential factor when buying a car. In conclusion, businesses would also respond to high oil prices by developing cars that use alternative fuel. Use of electric vehicles is a proof concept of vehicles using alternative fuel.
Reference
Bacon, R., & Kojima, M. (2006). How are Developing…...

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