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Bigger picture economics of rising gas prices

GAS AT 3.99
Posted at 7:45 PM, Mar 08, 2022
and last updated 2022-03-08 23:19:58-05

COLORADO SPRINGS — The impact of rising gas prices goes beyond how much it costs to fill the tank of your car.

"[It’s part of a] considerably larger picture," said UCCS Economics Professor, Joe Craig.

He points out petroleum is an energy source, but also an integral element in the production of many products.

Pavement for roads, rubber, and plastics, synthetic clothing material, some pharmaceuticals, also cosmetics are all products that include petroleum.

Fuel price increases are in addition to inflation already on the rise. Supply chain issues have been pushing up prices because of supply and demand. Backed-up shipping at U.S. ports has also been impacting prices.

"Now to move it within the country domestically is going to cost way more and you're going to see that pressure upwards on prices," said Craig.

The impact of rising prices on goods depends on whether this is a short-term spike or a longer trend.

"In the long term if we see this go on for eight weeks--we see it go on for a couple months, people are going to start changing their behavior in large ways," said Craig.

He offered the example of car buying habits changing decades back when there was the threat of fuel shortages. People shifted from large cars and trucks to more economical vehicles. It is still early, and drivers are not yet thinking about trading vehicles, but gas prices do have the attention of most.