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The Real Oil Shock (New York Times)

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Americans insist increasing fuel costs are causing financial hardship. Yet, economists from the University of Michigan and Paul Edelstein of IHS Global Insight found that expenditures on recreation show no significant decrease during periods of high energy prices. The thought is that Americans complain about fuel prices because it is the only volatile commodity they deal with directly. Increasing domestic drilling will not ease prices, according to Gal Luft, co-director of the Institute for the Analysis of Global Security. Luft said U.S. dependence on oil declined 15% in the last seven years. “What happened to the price of oil? It doubled,” he said. Analysts suggest that oil prices should fall soon, but as billions of people around the world enter the middle class, demand for oil will only increase.

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