Explaining Southern California's economy

Be thankful for expensive gas — and a gas tax?

Matt Yglesias makes a useful point about gas prices that I think applies to all of us in car-mad Southern California: 

It’s important to see that under present circumstances, anything that succeeds in promoting robust economic recovery would raise the price of gasoline….After all, unemployment’s 9.1 percent. If it fell to 7 percent, that would mean a large increase in the share of Americans who are commuting to work on a daily basis. And the United States of America is both a large country, and one in which commuters consume an unusually large quantity of gasoline as they go about their business. Consequently, 2.1 percent of the American workforce shifting from unemployed to employed means a meaningful increase in the consumption of gasoline.

The global oil markets are complex and don't always make sense at the pump. The price of oil falls, but the price of gas remains high. Or at least higher than we think it should be. I won't even get into the various issues involved, which range from refining capacity to OPEC production planning. There's a reason why some economists spend their entire careers looking at this single commodity. 

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