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Local motorists cope with high and rising gas prices | Business


Motorists nationwide are paying the highest average gas prices ever.

On Friday, AAA reported that the national average price of a gallon of gasoline was $4.33. In Illinois, the average gallon cost $4.57. Cook County adds 6 cents per gallon and Chicago 8 cents per gallon: the cheapest gas in Hyde Park has reliably been $5 a gallon over the past week. (It’s a little cheaper in Washington Park and at stations near the Dan Ryan.) 

The Associated Press noted that gas prices were rising well before Russia invaded Ukraine, but the price has skyrocketed since the war began. On March 8, President Joe Biden banned imported Russian oil to further cripple that country’s economy and acknowledged that Americans will bear the costs of “defending freedom” by not “subsidizing Putin’s war.”

One woman filling up her tank summarized the general consensus of neighborhood motorists about the cost of gas in two words: “It sucks.”

“What’s going on is that we’ve had this massive disruption in the global market for oil,” said Dr. Ryan Kellogg, an expert in energy economics at the University of Chicago’s Harris School of Public Policy, research associate at the National Bureau for Economic Research in Cambridge, Massachusetts, and, prior to his academic career, an engineer and economic analyst for BP in Houston and Anchorage, Alaska.

“It’s really important to remember when you think about U.S. gasoline prices that the oil market that we participate in is a global one,” he continued. “So even though the U.S. produces a lot of crude oil on its own, we’re still importing oil from a lot of countries actually at the same time that we are exporting crude oil to other countries, because we are intimately tied into the global market.”

Everything is connected: when crude oil prices go up, so do prices of gasoline, diesel, jet fuel and everything else connected with the world price, despite the level of domestic production, which is reflected in local prices at the pump.

Kellogg said the best way to think about what’s next for gas prices is to realize that the situation is inherently volatile: it could decrease soon, or it could increase further.

“I think anyone who says they have a really firm take on whether oil prices are going to go up or down and when that’s going to happen is being massively overconfident,” he said. “If there’s anything that we’ve learned from the history of oil markets, it’s that prices are very hard to predict, more so during times like this.”

In the 1970s oil crises, there were gasoline price controls, and gas stations rationed the amount customers could buy. That is not happening now, and prices are rising with demand.

Some people will have the financial capacity to absorb rising gas prices, and others will have to change their behavior. Some people like Amber O’Quinn are lucky to live within walking distance to her job. She recently moved here from Utah with her partner, a University of Chicago student, and specifically chose a house that was within walking distance to work.

Compared to Logan, Utah, a college town adjacent to the Bear River Range 80 miles north of Salt Lake City, Hyde Park and Chicago are flat and have comparatively good bicycle infrastructure. As she filled up her gas tank, she said she expects to bike more to get around the city in light of the rising prices.

“I’m really cost-conscious because I came from poverty,” she said. “I know how important numbers are, but people who have children may not have that ability. They just won’t have that flexibility.”

Eric May hasn’t had a car in 40 years; he said his needs are met by transit and his feet.

“(The CTA) has held prices all the way through the pandemic, even when you’d see buses with hardly any people on them. And they’ve kept the prices reasonable,” he said. “Of course, I’m 68 years old. I can remember when you could get on the ‘L’ for like 25 cents. So for me it’s not a problem.”

He did empathize with people who have to drive to get to work and supposes the prices are going to go up, but he also noted that the rest of the world has been paying high gas prices for a long time.

“What are you going to do?” he said. “We’re on a world market, and it’s what the market will bear. It’s all about supply and demand. And right now, demand is high and supply is low. So this is what happens. And it’s not like there’s a government policy you’re going to be able to do that says ‘we’re going to do this now and prices will go down.’

“I understand people’s frustration, because this is part of the whole inflation thing that’s eating into people’s pocketbooks. But at the same time, what are you going to do about it? I remember back in the ’70s when OPEC decided they were going to cut oil prices to raise gas prices, and there were gas lines. Things haven’t gotten that bad yet.”

Bonnie Fields, who drives, said she figured going to fill up at Costco would help a little. In her late 70s and retired, she said the decision to drive or walk to run errands around the neighborhood depends on the task. For several bags of groceries, she would drive; for a few items, she would walk.

“This is going to be crazy,” she said about the spiraling prices. “I don’t think I can change my habits very much. When I go downtown I never drive. I always take the Metra. But then wherever else we’re going, we really have to drive, because we go to see friends on the North Side. And we’ll Uber.”

“All these people who’ve decided to have SUVs and trucks because they didn’t think gas was going to go uphill, they’re going to find out,” she said. “Being older, we know that things go up and down, and you can’t say it’s never going to go up.”

Kellogg, the Harris professor, said rapid price increases hit people of limited means who are very car-dependent very badly.

“It is very hard to change your lifestyle away from relying on that transportation in the span of a few weeks,” he said. “You just can’t do it. You can’t change where you live, where your kids have to go to school, where you have to go to work. You have to live your life, and trying to get away from driving yourself around on such short notice is just really, really hard to do.”

By the time a fuel price crisis hits, he said, it’s already too late for people to address it. They’re already locked in, and it causes some people serious financial pain.

Similar situations can happen massive spikes in heating or air-conditioning costs or rent or property tax increases. Some households will have to make drastic reductions in spending, whether in food or health care or discretionary spending: toys, Netflix, etc.

Chicago at least has a public transit system; Kellogg said improving COVID-19 conditions may lead to more usage. And its climate and geography are conducive to biking.

As a European, Liina Raud is used to high gas prices. She is, however, somewhat irritated to be paying them in the United States.

“It is what it is, but I’m on a budget,” she said. “I am a student, so I am a little bit worried.”

Right now, she is filling up $20 at a time instead of the whole tank. She said she isn’t buying expensive clothes. 

Raud, who has lived in the United States for five years, has friends back in Estonia who are currently stockpiling gasoline. The Soviet Union annexed the country in 1940. Estonia is today part of NATO; Estonia-Russia relations are presently fraught.

“I don’t know where they would go, because there’s sea and then there’s Russia and then there’s Latvia,” another Soviet-annexed now-in-NATO country with tense relations with Russia, Raud said. “They’re ready to at least leave the capital.”

“I hope the situation is going to calm down and that it’s going to get into a stable state of mind, and I hope the gas prices are going to go down again,” she said. “I don’t know how, but I hope it will.”

Paris Williams understandably put rising gas prices directly in the context of the Russian invasion. He noted that some American liquor stores had stopped selling Russian vodka because of the country’s aggression; by Friday, Biden had outright banned its importation alongside other “signature sectors of Russia’s economy,” like seafood and diamonds.

Gas, however, was going to affect his pocketbook. “It’s terrible. Just terrible,” he said. In this period of inflation, he supposes rent will be going up, too.

“What are you going to do?” he said. “Go to work, pay the bills.”

Williams drives to run errands and to his jobs in the south suburbs. “One hundred percent, it might go to $6 or more,” he said. “Then I’m catching the bus. I don’t care. You’ve got to leave the house early. You’ve got to time yourself. You’ve got to think about it like you’ve not got a car.”

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