Energy has a direct impact on the U.S. economy. Energy shortages, in particular, can have significant economic implications. With an energy crisis, there generally is a period of decreased spending and reduced confidence in the economy. For example, during a period of high oil prices or oil shortfalls, gasoline prices increase, and higher gasoline prices translate into higher transportation costs. Higher transportation costs affect not only the day-today living expenses of most citizens but the daily operational expenses of businesses. This effect leads to an overall increase in the price of goods and services and to decreased consumer spending, which then, in many cases, can lead to a recession, a period of slowed economic activity.
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