We’ve seen fuel prices creep up over the past few months, and unfortunately, rising fuel prices is indicative of a recovering economy. NC State Economist Dr. Mike Walden:
“Well, the economy is recovering, and I think it is indicative of a recovering economy. We have seen most of our economic indicators pointing upward -- retail sales from consumers, the one piece of the economy that isn’t recovering very fast is the job market, I think that will improve in 2011. As the business community ramps and the household community ramps up what happens is, we use more energy; we drive more, and that is pulling up gas prices. We had a lull in gas prices in 2008 - 2009, primarily due to the recession, and this was a very, very devastating recession. Vehicles traveled in the US actually went down, which was the first time that ever happened. But, now that the economy is coming back, unfortunately, I think all of us will have to get used to at least $3.00 gasoline.”
So, does this mean that we could see $4.00 gallon gas any time soon?:
“What we saw during the last cycle, $4.00 a gallon seems to be the tipping point, that’s the point at which we saw a real change in consumers really trying to get more fuel efficiency and looking at alternative fuels. I don’t think….fingers crossed, I don’t think we’ll see $4.00 a gas this year, I think we will at some point.”
Walden suggests that as other world economies emerge, fuel consumption will continue to rise:
“Energy usage in the world will continue to rise, energy supplies are not keeping up and that’s going to put upward pressure on prices. And what that means is that people, as well as businesses and farmers eventually will have to find ways to cope with those higher energy prices through either finding substitutes or by becoming more efficient users of energy.”
NC State’s Dr. Mike Walden
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