CHATTANOOGA, Tenn.– Motorists may get a break this summer from the usual seasonal hike in gasoline prices, a University of Tennessee-Chattanooga economist said Tuesday.
Dr. Ziad Keilany, UT-Chattanooga’s Guerry Professor of Economics, said fuel prices may even drop due to a soft world-wide market for crude oil.
“Supply has finally caught up with demand,” Keilany said. “Everybody is pumping oil. Every country, is trying to increase production. Especially Russia and the former Soviet-bloc countries.”
“In the days before the collapse of the Soviet Union, the oil was used primarily for domestic purposes and now its for export. That will put an additional damper on the prices for oil.”
The price last week for a barrel of crude oil was less than $19, compared with $27.92 in December.
Whether fuel prices translate into actual savings depends in part on whether drivers have followed the trend to less fuel-efficient large cars, recreational vehicles and motor homes, Keilany said.
He said there was still a possibility fuel prices could go up later in the summer, but the increases would be confined to certain areas.
“That might happen due to severe weather conditions such as extreme heat, which would cause everybody to use more air conditioning at home, in the office, or in the automobile.
“A second factor would be summer travel, which is accelerating very rapidly because people in America have higher incomes and they are using bigger cars, instead of smaller cars. All that may mean spikes in prices, but nothing substantial because supplies continue to grow”
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Contact: Dr. Ziad Keilany (423-755-4116)