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wouldn't you be more likely to see demand reduction among the poorest consumers? For a typical American household earning fifty or sixty thousand a year spending a couple dozen extra dollars a month is unpleasant, but something that they can adjust to. On the other hand those 1000 a month earning middle class drivers in Latin America or Eastern Europe or other 'emerging' markets would be a lot more sensitive to price increases. Though of course E. Europeans at least already have much higher gas prices than in the US, albeit with much more efficient cars.

In any case I think that the US with its still quite low prices and high income levels is not the first place to look for the impact of higher prices on demand.

by MarekNYC on Tue Aug 9th, 2005 at 12:55:40 AM EST

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