Texas Tech professor says gas prices could stay high for months
AAA reports gas prices at a seven year high as crude oil prices climb
LUBBOCK, Texas (KCBD) - It is a symptom of the pandemic that we’ve seen across industries around the world: Not enough supply and skyrocketing demand.
A new report from AAA states that gas prices peaked this week at a nationwide average of $3.30 per gallon, the highest they’ve been since 2014.
“So supply will catch up, it will take time. It could be months, it could be six months before that happens,” Michael Noel said.
Noel, a professor of economics at Texas Tech, said the price at the pump always can be traced back to the price of crude oil.
“Crude oil prices are at a seven-year high. They’re up over $80 a barrel now. At one point they were down to $30 a barrel. For a couple days they actually went negative,” Noel said.
Prices tend to fall in the cooler months when fewer people are hitting the road.
“We’re increasing our demand because we’re getting out of this pandemic, and we’re going to have a little seasonal drop because it’s the wintertime. [It] also means that come spring, if the crude oil prices stay the same, we’re gonna see the prices go up even more,” he said.
Though demand is high, OPEC, the world’s largest source of crude oil, has maintained limits on output. But producers to our South are gearing up to meet demand.
“The Permian Basin is actually expanding in the sense that more rigs are going online. It’s just happening at a careful pace. They don’t want to see the price of oil drop again and be in the situation they were in last year,” he said.
There’s usually a delay from crude oil prices to the pump.
That means prices could increase another five to 10 cents in the coming weeks.
But Texas, and Lubbock in particular, still have the lowest gas prices compared to the rest of the country.
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