Economist Predicts End In Sight For Gas Price Spike
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If you drive a car you know that the price of gas is way up. Economists say it couldn't be happening at a worse time as the U.S. continues to recover from the recession.
Here in Rochester, AAA says the average price of a gallon of gas was $2.85 in July. Today it's up to $3.25 and still rising.
Just how much it's going to rise is up for debate, but a local economist says this spike will probably be different than what we saw in 2008.
It should come as no surprise that people aren't happy about the price of gas.
"I find it to be disgusting," said Lynn Ras.
"I drove an extra five miles to get an extra five cents off here," said Norm Underwood.
"You might say here we go again," said Professor George Cook of the University of Rochester's Simon Graduate School of Business.
Two years after we saw prices push past $4 a gallon, they're starting to move that way again.
"I would say this one caught us a little bit by surprise," said Cook.
Cook says there's no simple cause, but rather a number of reasons.
"There's a huge increase in global demand, foreign countries and so forth," said Cook. "There's more cars being sold foreign than pretty much domestically now."
Like 2008 there's also a certain amount of oil speculation and commodities trading. Unlike 2008 Cook doesn't think prices will get to $4.
"$3.50 today is probably the $4 back in the previous scenario when it spiked," said Cook. "People have less. They're unsure about their jobs. So it could well be that $3.50 is the magic point this time around because of the nature of things."
Cook says once prices get to those magic numbers like $3.50 or $4 people really do start to change their habits. He says once that happens the prices start to fall.
"I think people will begin to pull back," said Cook. "They'll pull back in terms of obviously travel, but I think you'll see the budgets are so tight anyway."
It's something drivers we spoke with are already looking at.
"We're going to look into carpooling," said Ras. "Like I'm going to start carpooling with a girl at work and he's going to look into carpooling with somebody else."
"You think more about just going down to the corner and getting a cup of coffee," said Underwood.