Increased demand, tighter supplies, driving surge in gas prices, says Virginia Tech economist
Pent up consumer and business travel plans along with the onset of warmer weather are all playing a substantial role in the uptick of gasoline prices this spring, according to Virginia Tech economist Mike Ellerbrock.
“Oil producers have been assuming for months that consumers expect gas prices to rise once we come out of hibernation, so they fear little push-back for fulfilling expectations,” said Ellerbrock. “You can add in the dramatic weather events that have disrupted network capacity and the transition beyond fossil fuels. It’s not surprising that oil producers and refiners will take advantage of consumer fears.”
Ellerbrock teaches in Virginia Tech’s department of agricultural and applied economics and is a noted expert in natural resource and environmental economics, along with social and technological changes affecting individuals, families, and communities.
“Other influences that drive up gas prices this year include the fact that Russia and Saudi Arabia have both cut crude product the last three consecutive months. And of course, domestic refineries are now shifting to summer blends with lower vapor pressure to limit pollution and those blends are more expensive to produce,” he said.
Motorists should anticipate the price per gallon above $3, “at least during the summer travel season, then moderation after the travel rush calms down,” said Ellerbrock.
Since gasoline prices tend to impact the cost of just about everything else, he warns of across-the-board inflation on food and consumer goods, and other industries such as rubber, fertilizer, plastics, cosmetics, paint and electricity.