Thunder From Under
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FLINT TWP, Mich. (WJRT) — This is a tough site to accept and a tougher price to pay. Michigan gas prices climb to its all-time high of 4.25 c$/gal.
It’s a steady climb at the pump that motorists shouldn’t expect as long as the Russian-Ukrainian conflict continues.
“The trade implications are currently major unknowns. No one knows how long this dispute over sanctions will last,” said Stephen Jones, senior vice president of all market strategies at energy analytics firm Argus Media.
And while motorists are paying the price, lawmakers are pushing for more production on U.S. oil reserves.
But Jones says with capitalist withdrawal from production during the COVID-19 pandemic, the industry has yet to recover and restore confidence.
“Investors need to take a longer term view of firm prices to justify spending and upside to increase US production,” Jones said. “The conditions are perfect except for oil price stability and financial discipline to allow this to resume.”
Economists agree that investors are currently at risk.
“If you’re an oil company, if you’re an oil driller, if you’re a hydraulic digger, it’s just not profitable to invest in a new oil well, when there’s this glut of supply. in oil,” associate professor of economics at the University of Michigan–Flint, Chris Douglas, said.
While the Biden administration is currently working to find other oil suppliers to cut ties with Russia. Douglas says there will always be a need for oil trading.
“There’s no way for the United States to disengage from the global economy, we’re looking at things like crude oil,” Douglas said.
In addition to high prices, inflation of the pump increases the cost. Experts say it’s unclear exactly how prices could rise.
“I wouldn’t be surprised to see 8% or 9% inflation when you take into account the increase in the price of oil and gasoline in addition to prices in general,” Douglas said.
