Oil and gas price spikes that make even necessities like food and toilet paper appear out of reach have already been seen multiple times in our lifetime.
It occurred after 2000, then again in 2008, and we got a peek of it earlier this year when, according to AAA, petrol prices hit a new all-time high of almost $5 per gallon on June 14, 2022.
Even the biggest businesses are facing trouble. Surprisingly, even the biggest giants like Facebook, Google, and Apple have paused hiring.
As air, ocean, and freight cost all increase, businesses that export goods frequently and are involved in shipping feel the effects the most.
This is the reason why, when petrol costs increased, the cost of food, technology, and pretty much everything else skyrocketed.
This eventually leads to a rise in price, and the consumer is only left with two options: either to spend more or to cut it out of budget.
Oil is a market-driven good; supply and demand determine its price. Additionally, gasoline is made from refined oil, hence supply and demand both affect gasoline pricing. Therefore, the US frequently finds itself with its hands tied when oil prices are high.
There is a trend observed in the relation between the recession and the rise in oil prices.
A recession nearly invariably happens after or during an increase in oil prices. It makes the perfect reason that if more money is spent on a fixed expense (gas), less will be available to spend on other parts of the economy, causing a contraction.
Further stressing the economy is the fact that gas prices typically decline considerably more slowly than they increase.
Clean energy can offer a sustainable alternative to relying on a market-driven commodity (gas and oil) to power the economy.
The US is funding these initiatives with billions of dollars for that reason. Once implemented, sustainable energy sources such as solar, wind, and electric cars can help the US achieve self-sufficiency and lessen the effects of a recession.
The US is less susceptible to a recession the more electric cars and sustainable energy initiatives are implemented. But in order for this theory to be valid, it must have the necessary infrastructure to support widespread acceptance.
In order to launch the movement with the IRA law, the US is investing $369 billion. As a result, the US is creating a sustainable, clean energy ecology.
Instead of becoming a victim of rising gas costs, the US may be able to manage energy prices and prevent a recession.