Santorum Says $4 Gas Caused 2008 Financial Collapse

Gas Prices - photo by Robert Kuykendall

Today Rick Santorum said gasoline prices were the cause of mortgage defaults that led to the financial collapse of 2008. “We went into a recession in 2008 because of gasoline prices. The bubble burst in housing because people couldn’t pay their mortgages because we’re looking at $4 a gallon gasoline”, said Santorum. He ignores the housing bubble and risky mortgages that were the actual cause. The collapse was likely accelerated by high gas prices but it would have happened regardless, so it definitely was not the cause.

Later when a reporter asked for clarification, Santorum said, “I said that was a factor. I’m sorry, I’ll make sure I’m much more specific…energy prices were spiking in the summer of 2008 and that was a factor.”

But maybe Santorum is on to something.

Gas prices were not the cause of the 2008 financial collapse, but high prices could cause future economic downturns. One possible scenario of peak oil is a boom-bust cycle of large and rapid increases in the price of oil – due to demand – followed by steep declines due to economic recession – and drop in demand – caused by the high oil and gasoline prices. And then the cycle repeats over and over. This is a good reason to move away from burning oil and gasoline as a primary energy source used for heating and transportation. This is where Santorum goes off the rails because he, like all Republicans, wants to drill for more oil which will at best delay the inevitable.

dks

photo by Robert Kuykendall via Flickr

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EconomyElection 2012

#financial collapse#gas prices#housing bubble#mortgage default#oil#peak oil#petroleum#recession#Rick Santorum