Skyrocketing gas prices are sure to be a cause for concern, but the cost won’t last forever.
That’s according to Tennessee Tech College of Business Dean Dr. Tom Payne. Payne said that despite issues with inflation and conflict in Ukraine, the laws of economics are still working.
“The supply will eventually rise to meet the demand,” Payne said. “So perhaps the best question is, is how long will that take for that to happen or for it to go back to normal levels. Which happens to be about $60 to $80 a barrel.”
As of Wednesday, prices now sit at about $110 a barrel. According to USA Today, AAA figures show that diesel prices are now the highest on record. On Tuesday, the cost was $4.17, breaking the July 2008 record of $4.11, which would be around $5.25 today when adjusted for inflation. Today, the national average is $4.25 a gallon.
Payne said that he anticipates it to take a better part of 2022 before prices begin to return to normal. He said that the U.S. announcing the release of 30 million barrels from its reserves to add to the international release of another 30 barrels, is a promising sign. Payne said that signals that we intend to support more oil production globally to meet consumer demands.
“Anybody doesn’t need to be an expert or an economist or a financial economist to understand that this is hitting us right at home and right in the pocketbook,” Payne said. “So I would say that we’re going to endure this, with these high prices supply will eventually come to meet demand, we have to be judicious with budgets, look at ways you can save in terms of costs right now. ”
Payne said that while Biden’s sanctions on Russian oil are a big deal because they are major supplies on the global market, they will probably not have a huge impact on the United States directly. He said that Russian oil only accounts for about 12 percent of the United States’ oil imports, whereas much more comes from Canada.
Payne said that one thing that he has faith in, is the private sector. He said that regardless of government policies and things at the margins, futures prices can help affect the price at the pump.
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