Gas prices empty students’ wallets

Huge increases in gas prices have hit GC&SU students and staff hard in their wallets and psyche.

Associate Professor of Economics & Finance Benjamin Scafidi said that there are two major reasons for the upswing in price.

“One, because OPEC, which is a cartel of most of the oil producing nations, had decided to restrict supply of gas,” Scafidi said. “Also, world demand has been increasing at a fairly healthy rate. It has always increased at a small rate, but now you have China and India developing quickly, and those are one third of the world’s population. Those two countries are increasing their demand at a very high rate. So the combination of the restricted supply and the demand caused the price to go up before (Hurricane) Katrina.”

Gas prices leveled out at an average rate of $2.50 before Katrina hit, said Scafidi.

“Now, Hurricane Katrina has caused what appears to be a temporary disruption in the supply of gas to the U.S.,” Scafidi said. “That is also for two reasons. One is that a lot of the refining capacity of the U.S. was down and disrupted by Katrina. And also the port in New Orleans was where a lot of the our oil comes into the country.”

This surge, combined with restricted supply and high demand, was bad enough to drive prices up from $1.70 in March 2003 to $3.10 in September 2005, according to the Energy Information Administration.

Relief is in site for consumers, as gas prices have begun to come back down.

“Prices have been going down almost daily, and that is because the refineries are coming back online and the ports are being reopened,” Scafidi said. “So it appears that we are going back to the equilibrium price that we had before Katrina.”

Even at this equilibrium price, some students are having a tough time coping with the new standard.

Paul Cressman, a criminal justice major, had to quit his hometown job because of the increase in travel costs.

“Last year (gas) cost me about $35 a week, and this year, it was costing $40 plus a week,” Cressman said. “So I was not making enough money to make it worth my while to go home and come back for work. So I had to basically drop my job and not see my family for weeks on end. I found another job here in Milledgeville for less money and less hours, but I am still coming out better.”

Even as students like Cressman struggle, Scafidi said that consumers can adapt over time.

“People can adjust in the long run when the price of gas goes up. And what you have seen, even with this run up in the past few years, is that the sale of the Toyota Prius has gone up, while the sale of SUVs has dropped,” Scafidi said “People will put more fuel-efficient things in their homes, like appliances and insulation. So my guess is that we will not have much more of a huge run up in prices.”

Admissions Specialist Marlene Lovejoy has already started making these adjustments.

“I pay around $50 a week, where as I used to pay around $30. So I am spending more money,” Lovejoy said. “This leads me to going slower when I drive and thinking more about where I am going and what trips I will take. My husband has also not taken as many trips because of (gas).”

Posted by Colonnade Archives on Sep 23 2005. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry