I’m spending the summer in Ithaca, a small city in upstate New York that houses Cornell University. The city itself is not very dense with houses spread out. Yesterday I received a note from my paper carrier saying that due to the cost of fuel they could no longer afford to deliver the paper. So do to fuel prices this person was forced not just to change their habits, but to actually leave a job because it was costing them enough money to do the job that it wasn’t worth it to continue doing it. 

This to me shows that the high fuel prices we are experiencing need to be dealt with, in some ways we are becoming more efficient which is a good thing, we are spending less time driving, allowing us to be more productive. However if people are also forced to leave a job due to fuel prices we are losing efficiency, which is a big problem. I don’t think the solution is to lower the price of gas but to get off it, but what needs to be done is something I am not sure of and for another post, but I can say that something needs to be done soon.

For more on the effects of fuel prices see Greg Mankiw’s series “Cross-Price Elasticity of Demand”