Oil Price Shocks
Rising gas prices are always a headache to deal with. But they can often pose much greater dangers than just forcing you to pay more at the pump.
Rapid increases in oil prices can be due to what is called supply shock — specifically, negative supply shock. In this scenario, the supply of oil suddenly seems to dry up, forcing prices to soar very quickly because the demand for it has not gone down.
And not only will the sight of higher gas prices impact consumer confidence, but the increase in the cost of driving affects virtually every type of economic activity. From commuting to work to the trucks getting goods to market, more money spent on gas means less money for everything else.
