Gasoline prices rising, but still a bargain from five years ago
KENNESAW, Ga. (Apr 6, 2016) — Though gas prices in recent weeks have been on an upswing and are expected to increase as the summer driving season draws closer, one Kennesaw State University economist said the cost at the pump is expected to remain far under where it peaked just five years ago.
Roger Tutterow, professor of economics and director of the Econometric Center at KSU, said while the increased demand for gasoline typically seen during the warmer months would likely have an effect on prices, crude oil prices would have a greater effect, and he believes those prices will stay relatively low through the remainder of the year and into 2017.
“We have increased domestic production so much over the past 10 years — that built up some inventories. And we have yet to see a meaningful reduction of oil coming out of the Middle East. That kind of departs with a historical pattern where for the past several decades, when oil prices came down, Middle Eastern countries would cut their production to support price,” Tutterow said. “They’ve been reluctant to do so the past few years, so we really haven’t seen much in the way of a supply restriction in response to lower prices out of that region.”
As the week began, crude oil prices were just under $36 a barrel, according to the U.S. Energy Information Administration. A year ago, according to the agency’s statistics, the price was just over $50 a barrel, while in April 2011, the price peaked to nearly $110 a barrel.
The summer of 2011 saw the price of regular unleaded gas hit the $4 mark, according to GasBuddy.com, a website that allows site visitors to post and view recent retail fuel prices.
“The key is to keep it in a longer-term perspective, and both crude oil and gasoline are at extremely low levels versus what we’ve gotten used to over the past five or six years,” Tutterow said. “While we see volatility on a weekly, if not daily basis, in gas prices, I think it’s important to acknowledge that even with the modest upward movement in the last couple of weeks, things are still very low versus to where we were five years ago, even really two years ago.”
In April 2014, according to GasBuddy, the average gas price was more than $3.60 a gallon. Prices have been on a downward trend ever since.
The country’s average gas price one year ago was close to $2.40 a gallon, while Atlanta’s average price was about $2.20 a gallon, according to the site. Last year’s prices peaked in mid-June, reaching $2.84 in Atlanta, while the national average was about $2.80. Though the metro area’s prices were a few cents higher than the national average in late May to about early July, the past 12 months saw the metro’s prices typically a few cents under the country’s average.
Atlanta’s average gas price on Tuesday was $2.08, according to GasBuddy, with the lowest in Marietta priced at $1.86 at the Gulf station on South Cobb and Appleton drives.
“Even if we see gas prices rise up in late spring and summer, when we benchmark it against where we were four, five years ago, it is still incredibly cheap gas at the pump, and that’s great for people who travel a lot, it should help return some discretionary spending back into the regional sector,” Tutterow said.
Tutterow said in the long run, the cheap oil prices, and therefore cheaper gas prices, should stimulate economic growth in the country. “In the short run, there are parts of our country, particularly those oil-intensive parts, like the Dakotas, Alaska, Oklahoma, Texas, Wyoming, where lower oil prices have caused those economies to soften,” he added.
The site also ranks the average regular gas price by state, and on Tuesday, it reported that Georgia’s average price was $2.031. Oklahoma was the state with the lowest price at $1.782, though Georgia’s neighbor, South Carolina, had the second lowest at $1.837. California had the highest at $2.794.