Higher gas prices here to stay


Weren’t gas prices supposed to go down?

Looking at the short term, one could say they have — the average retail price for a gallon of regular unleaded gasoline in California has declined from its mid-May peak of $4.26. The aggregate trajectory of state gas prices from last year at exactly this time, however, shows an unmistakable, very significant increase in prices.

One year ago today, a gallon of regular unleaded gasoline cost $3.08 on average, but today that average hovers at $3.74. Around campus, the lowest price you’ll find is $3.53 a gallon at a gas station called “C&J.”

The only time gas prices in California have reached this level for any sustained period of time were in the heady days that preceded the bursting of the housing bubble in 2008.

Even with market volatility in the past few weeks and several mixed reports on the country’s economic vital signs, gas prices are not decreasing.

Growing demand is without a doubt fueling an increase in U.S. gas prices, but that demand is, troublingly, not coming from our own shores or our own economy.

Esther Cheong | Daily Trojan

Global growth and subsequent demand for oil, namely from the big developing nations like China, India and Brazil, is only accelerating despite a sluggish U.S. economy and a debt-ridden Eurozone.

Concentrated foreign economic growth is inflating gas prices in the United States, and we had better get used to it.

As developing nations continue rapid growth, transitioning away from factories and straight production of goods into a more diversified economy, wages rise, workers’ wealth accumulates and the newly anointed middle class masses hit the road.

But the increased consumption of oil, and the subsequent rise in prices, won’t occur solely from an increase in miles driven worldwide.

Wait until that new middle class decides to move out of overcrowded cities into the suburbs, firing up a phalanx of backhoes, bulldozers and graders to ready the earth for a new surge of housing. Global growth simply requires increased consumption of gasoline, and the rising energy prices of the last quarter century stand witness to the fact.

In the coming years, everyone will be paying more for energy — of all types and across all nations — but gas prices will be particularly affected by global economic tides, especially here in the United States.

Given our extreme dependence on an abundance of cheap fuel, we are particularly susceptible to price rises, even more so here in Southern California.

This region is built for the car; without one, you can’t go all that far. As a handful of nations presses forward and global demand for oil rages, the United States — especially auto-centric cities like Los Angeles — will be among the first to feel a sustained pinch at the pump.  Trojan commuters have seen the fits and starts of this rise already, but the largest push is still to come.

This will make an already expensive school even more of a financial burden. It’s not a stretch to assume that enrollment from commuters will steadily decline as gas prices steadily rise.

Gas prices might not increase dramatically tomorrow, or next week or in the next few months, but the trend of the last three years is largely indicative of what lies ahead. The extent to which gas price escalation interrupts our normal economic patterns and daily activity, including how our economy will function when you can’t get to Vegas for $49 one way,  contingent upon our ability to identify substitutes for gasoline in the long term. Current oil prices and rapid — albeit concentrated — economic growth reinforce the same message: The days of cheap gas are long gone.

 

Teddy Minch is a graduate student studying public policy.

1 reply
  1. Iz Teremka Kennel
    Iz Teremka Kennel says:

    Gas prices are extremely high in Europe and it is my feeling that there is a movement out there to make the oil prices just as expensive as prices in Europe. Essentially you will have one world price of oil wherever you travel.

Comments are closed.