Rising Fuel Prices Follow Energy 'Perfect Storm'
DALLAS (CBSDFW.COM) - With crude oil prices hitting an 11-year high, no crystal ball is needed to predict what's next: higher prices at the pump.
"It's ridiculous," shares a North Texas commuter who said his name was Dan. "I'm sure it's going to get worse before it gets better."
Now, some drivers are pinching pennies while watching them turn to dimes pouring into the tank.
"I saw $3.27 so I jumped on it," explains Dan. "Everywhere else is $3.59 plus. Surprised I didn't have to wait in line."
He was only half-joking.
"We've been hit by a kind of the perfect storm and then Ukraine came along," explains Bob Bullock, Director of the McGuire Energy Institute at the SMU Cox School of Business.
Bullock has spent some four decades watching the energy roller coaster and his advice to weary North Texans is "just hold on."
"So, everything has acted to push prices up the first half of the year," explains Bullock. "Hopefully in the second half of the year--I'm not saying it's gonna go significantly down, but there will be some pressures to at least temper the market a little bit."
COVID-19's arrival brought the world to a halt. So, when demand fell, fuel prices followed, slowing production as well. But that was two years ago.
Now, shut-in weary Americans are on the move again and that demand was already pushing prices higher. And then Russia invaded Ukraine.
"That has just made it much, much worse," explains Bullock, "and made it go up much, much faster."
Still, Texas is on the right side of the energy equation.
"This time around it may not be as quick or as obviously beneficial as maybe in some years past," says Bullock, "but the state's permanent university fund which funds our two major university systems will benefit significantly from higher oil prices, the state government's coffers. Also, we're the center of oilfield services for the whole world. So, wherever there's drilling, Texas will service that, but we still are paying nearly $4 a gallon at the pump and it's gonna be a while before that goes down."
And that seems to be the economics lesson that concerns commuters the most.
"Good for Texas," says Veli Varraza, "but not for my pocket. So. I don't see the logic."
