Summary
This article talks about how prices in general should be lower in the worst recession since World War II, but right now the prices in the economy are rising, "climbing 26 percent in the last month [May]." The good news is that many oil traders believe that the recession is "at or near its worst, meaning a recovery could start later this year; the bad news is that many people are unwilling to pay for gas at this price, during a recession, will people pay for gas when the recession is over, when the prices rise even more? Because people are scared of the prices increasing, countries all over the world are signing a bill to regulate the use of oil.
Connection
This article has concepts related to the Financial Accounting 12 because chapter 2 deals with "business transaction analysis and financial statement effects." Many companies and organizations own company cars, which are mainly used for the company, not for personal use. People using cars means people purchasing oil, and when they purchase oil for the company's car, the cash of the company should be decreased, not the user's cash. The cost of oil is under automobile expense; therefore it's an expense to the company, and the company would be able to claim more tax return. Due to the increasing oil prices, the company may have to sell off some assets in order to pay for the oil,
Reflection
I believe that the increasing prices of oil will play a big role in affecting the balance sheets and other financial statements of companies. Increasing oil prices mean increasing expenses for companies; during this year and last year, the oil prices have increased dramatically, forcing some people to find new alternatives to driving. People should be aware of how scarce our natural resources are, and should try to reduce the use of it. I think that countries are showing some initiative by signing that bill; hopefully this will help us realize how important it is to save the resources.
