The high cost of living

Are we now paying record high prices for unleaded gasoline? The highest average price was $3.04 in 2005 dollars back in 1981. High oil demand from China couple with the recent widespread damage caused by Hurricane Katrina will likely send the average price well above $3.00, meaning we will be paying the highest average prices in recent memory.

The effects of rising gas prices are both immediate and long-term. The long-term effects will determine the course of the American economy, which continues to skew more to the consumer side of the equation. Some are already declaring a return to stagflation, especially in the face of a Federal Reserve more apt to raise interest rates, but let's keep the doom and gloom in check.

America has proved itself a great reactionary society, but how can we react positively to the high cost of living? Will we all start selling our heavy trucks and cars in favor of more fuel-efficient models? Will we starting using public transportation and bikes to move ourselves? Will Congress or the President call for our nation to begin conserving our fuel rather than promising to find that magical alternative crude oil reserve in our hemisphere? Will higher fuel efficiencies to be available within five years be mandated of domestic auto makers? Will the internal combustion engine finally be abandoned? Who will save the larger airlines whose past inefficiencies are faced with rising fuel costs?

Sometimes, society needs a shakedown. Higher gas prices coupled with this recent devastation might be just that.