Upper Cumberland residents are seeing the impacts of the highest oil prices in seven years.
Tennessee Tech Associate Accounting Professor Dr. Steve Garner said that the increase has to do with supply and demand effects.
“You have OPEC nations that are limiting supply that is hitting the market,” Garner said. “Another thing, if you’ve paid attention to just supply chains in general, think of even getting a car right now, there are issues in the supply chain, that drives up prices.”
Garner said that for demand, more people are wanting to get out and do things.
Garner said that there is also a slight political element to the increased price as well. He said that gas prices are typically higher under Democratic administrations than under Republican administrations. He said that this has to do with Democratic administrations having more restrictions on production.
“The more regulation you add in the more it costs companies to comply with that regulation,” Garner said. “So it’s a pendulum swing. So, Republicans, their whole platform is smaller government, less regulations, so when they have less rules that need to be complied with, that’s fewer costs for gasoline producers which ultimately consumers get stuck with the tab. And then it goes the opposite direction under a Democratic administration. They’re wanting to really shut down fracking as much as possible the way I understand it. There are probably fewer tax incentives for companies to be high-producing oil companies in the U.S. It’s really policy-type issues that drive price differentials.”
Garner said that it’s not purely policy. He said that should Trump still be in office, his administration would see a similar increase in gas prices due to the other supply issues.
Garner said that gas prices should begin to go down once supply chain issues begin to resolve. He said that it’s the rise and fall of prices are not uncommon, and typically act in a cyclical nature.
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