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No one is enjoying or benefiting from the sharp increases in gas prices over the past couple of years (with the possible exception of those owning substantial blocks of petroleum industry stock). But to argue that these price increases will cause an economic depression is a gross exaggeration. Before looking at why this is so, I want to (at the risk of being pedantic) be clear about just what I mean by the terms "recession" and "depression." A recession is defined as two or more consecutive quarters of negative (falling) economic output. There is no formal definition for a depression, but I understand the term to mean a period of greatly lowered economic output, lasting for several years and without sustained recovery. Now, there are three points to consider in showing that we are not headed toward such a depression due to increases in gas prices. First, a look at similar jumps in the cost of gas in the past; second we need to look at what other factors are "in play" in the current economic climate, and finally at what the short- and long-term effects of the higher gas prices is likely to be.

This jump in oil (and thus gasoline) prices is substantial-essentially it has doubled in a couple of years. But it is actually no more than the latest in a series of such jumps, dating back to the 1973 "oil shock" In each case, the economic consequences have been negative-and no one questions that is likely to be the case this time around. However, those negative effects are limited. The original 1973 jump in oil prices is a good example. Then, the economy was already under stress from the effects of a long war, high inflation, and nagging government spending deficits. Combined with the "oil shock" these factors did send the economy into a recession, and for several years afterward, economic growth remained sluggish. But no one could reasonably describe the period as a depression.

The current economic climate is in many ways similar to that in 1973. In addition to the rise in oil prices, and in energy costs in general, we have an economy burdened by the effects of a long war, rising inflation, and a housing market that is in crisis. Economic growth is already falling. Are we then headed for a recession? Well, although economic predictions are notorious for their lack of certainty, but it is very likely.

So, what are the likely consequence of a recession? In the short term, thee is little to cheer about. Along with a recession will certainly come a tight job market, higher

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