Oil and the U.S. economy Assignment Example | Topics and Well Written Essays - 750 words

Oil and the U.S. economy - Assignment Example The US remains very dependent on these foreign oil reserves for its functioning economy which leaves us helpless to disruption. The US consumes more than 25% of the world’s oil and this is going up by 2% every year; 57% of this oil being consumed is imported from Canada, Saudi Arabia, Venezuela, and Mexico (Churchill). What this means is the US is built around the use of oil for cheap, reliable energy. The US economy, from its most basic consumer base, cannot survive without it for very long. Despite the US’s clear dependence on foreign oil the US is less dependent on this oil as it was in 1973 and 1980. According to the New York Times, â€Å"the energy used for each dollar of gross domestic product in 1980 was almost 70 percent greater than it is today. While we have collectively wrung our hands over the decline of manufacturing in the country, it has also reduced the relationship between energy prices and growth† (Goolsbee). The US commuter is more dependent than ever though. People live farther from their work and drive more. Because fuel efficiency standards in the US stopped going up in 1990, fuel inefficiency creates a higher demand among US commuter for oil to fill their tanks. When oil prices go up dramatically like in summer of 2008 the US commuter was forced to make difficult choices, and the economy scaled back because the consumer was left in shock by such high prices. This oil shock was right before the economic downturn (Panzner). On the stock market commodity prices and stock prices have an interesting relationship. When commodities go down in value, stocks usually go up in value (Mitchell). This relationship causes some people to look at oil prices in relation to the US economy as a whole when thinking about where the US economy will be going. Oil prices are a big commodity that many analysts look at, and if oil prices change, commodities in general change. This is because oil