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Show 10 SPRINGVILLE HERALD Thursday, May 25, 2006 we doomed for Are I ( - Z -4 i - 'i t i" i another oil shock? With all pomp and circumstance, the future class of 2018 graduated from kindergarten at Westside Elementary. Ele-mentary. They shared a program of all that they had learned throughout the year with all students, parents, par-ents, family members and friends in attendance at the graduation ceremonies. Congratulations to West-sideis West-sideis kindergarten graduates of 2006! vvmimg oummer innis Clinics for All Ages! Tennis, a sport of a life-time! Lessons begin Monday June 5th and will run throughout the summer. Private and group lessons will be taught on a brand-new private tennis court in Mapleton: $80 for 2 week sessions Mon-Thur. Call before classes are full! iiliil fe' ;'ri : BANK j...- UTAH'S 1 SBA LENDER 801.623.1300 wMWMm . ;' k mm Dr. Dirk Mateer Like most people, I feel the sting when it costs $55 to fill up the family minivan. As a result, I've been driving dri-ving around town more often of-ten in our Civic, which gets twice the gas mileage. I suspect sus-pect many of you are wrestling with similar choices. choic-es. ' As someone who studies and teaches economics, I have had other, more troubling trou-bling thoughts concerning the current price spikes: As gas prices have inched higher, high-er, I began to wonder if we would experience a repeat of the cost-push stagflation of the 1970s. None of us wants to relive the nightmare night-mare of those oil shocks. To my surprise, the data suggests the opposite.. The economy is growing, unemployment unem-ployment is low, and inflation infla-tion is tame. By any measure, mea-sure, these numbers are superb. su-perb. How can it be that this economy is holding up so well when the last time we faced a significant spike in oil prices in the 1970s, the U.S. economy suffered through two painful recessions? reces-sions? ' : : ' Before explaining why this price episode is marked- - .X - Wmm 1 MH m m mm iii P li jf l!fSIHiilpif Ipliiiil pa ly different, let us go back in time. As a teen, I witnessed the oil embargo from the backseat back-seat of my parents' station wagon. Gas lines were long, and gas was in short supply. Everyone had to plan ahead to get gasoline, and rationing ra-tioning meant that travel was restricted and people stayed closer to home. This put a damper on economic activity and contributed to the already low downturn. In the 1970s, supply was short. Today, demand is high. This is a big distinction. Peo- Ele can get gasoline today, ut it costs more. Consider why this matters: A demand-driven price change works differently than a , supply-driven change. The higher prices are a result of increased domestic do-mestic and international demand de-mand for gasoline. Price increases in-creases do not stop people from driving; the gas is still there, but the increases do cause people to spend more on gasoline. Think of this as the circle of life: When I fill up, I get the gas I want and the station sta-tion ; gets the dollars it wants. Those dollars do not disappear they are circulated circu-lated throughout the economy. econo-my. Gas-station owners take the dollars they receive and buy stuff that they want, which, .in turn, becomes someone else's income. This pattern repeats itself until these exchanges eventually peter out. In short, a demand-driven price increase alters how we spend our incomes in-comes but not how much we spend. Am I happy about higher gas prices? No. Gasoline is taking up a larger share of my monthly expenditures; however, this ; has not stopped me from continuing to spend. And apparently I am not alone. Worldwide economic growth, most notably no-tably in the United States, China and India, has led to significant increases in the demand for energy. So everyone is partly to blame for higher gas prices. ar- r lllll lllllllllllllllil Halie Augustus, daughter of Tom and Debbie Augustus, will perform at the Art City Days Talent Festival Saturday, June 3, at 7 p.m. at the Spring Acres Arts Park. The festival is free and will feature some of the brightest young talent in Sprngville and Mapleton in dance, vocal, instrumental in-strumental and piano performances. ESTABLISHED 1956 ' ml l SO Years of Falling in Love And since politicians do not want to get caught in the uproar over prices, both sides of the political aisle are pointing fingers and trying to insulate themselves from the wrath of angry consumers. con-sumers. The frenzy among lawmakers led the U.S. House to pass a bill to make oil price gouging a federal crime. The vote was 389-34, in spite of the fact that price gouging associated with gasoline sales has been almost al-most non-existent. Intervention Interven-tion in the market is not the answer. What is the answer? The market; The U.S. economy is now larger, more diverse, and flexible than it has ever been. In the past 30 years, the economy nas doubled in size, created tens of millions of new jobs, and re-centered itself for the information age. Ideas can be brought to the market more quickly, and the Internet has spurred new forms of commerce. All of this has reduced our dependence on oil. Furthermore, Further-more, innovations have created cre-ated more fuel-efficient vehicles ve-hicles and hybrids, making the typical automobile today twice as efficient as the gas-guzzlers gas-guzzlers of the 1970s, so we don't need as much gas to get where we need to go. Compared with our counterparts coun-terparts in Europe, who pay $7 per gallon, gasoline is still cheap and plentiful here. By the time this is no longer true, the market's invisible forces will have perfected alternatives to power the transition to another source of energy. This is the good news. Unfortunately, Un-fortunately, the bad news is that this message is lost on the media and on Capitol Hill. That means that fingers will keep on pointing. , Dr. Dirk Mateer is a Senior Se-nior Lecturer and Director of Undergraduate Studies in Economics at Penn State University and a contributing scholar with The Center for Vision & Values at Grove City College. Col-lege. ' : A |