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Gas prices expected to keep climbing as government has run out of options

Gas pump
Posted at 6:05 PM, Jun 08, 2022
and last updated 2022-06-08 20:26:19-04

CORPUS CHRISTI, Texas — On Wednesday, the national average for gas was $4.95 a gallon and here in Texas, the average is $4.61. To break it down further the average in Nueces County was $4.51.

If you think that sounds rough, some experts are now predicting the national average might reach $6.00 a gallon this summer.

“At the beginning of the year, I said it won’t go higher than $3.00. Obviously, at that time we did not anticipate the war,” said Jim Lee, economics professor at Texas A&M University-Corpus Christi.

Lee said the key to understanding the gas price issue is the Russian invasion of Ukraine.

Although the U.S doesn’t rely on Russian oil, other countries do and it affects the global market.

President Joe Biden does not set gas prices, but Lee said he’s taken steps to try and help bring the price down.

“He’s tried to talk to oil producers, he’s gone to Venezuela, even talked to Iran and also recently OPEC. All those efforts don’t seem to have any impact,” said Lee.

What’s left for the president and government to do?

“I'm sorry, I have to laugh because he seems to have exhausted most tools that he can do,” Lee chuckled.

Lee thinks the government should now turn its focus to retailers. He points out there is a strong disconnect between oil producers and the price at the pump.

"Historically speaking, when we see an increase in gasoline prices by 25 cents, we would expect oil prices to go up by $10," Lee said. "That's the historical trend, but that rule of thumb doesn't seem to hold up anymore."

Oil prices have hovered around $120 a barrel. Lee said that with gas prices over $4.50 nationally, the price of a barrel would be expected to be about $150.

Lee added some call it "price-gouging" and others call it "profit-making."

Because of that, Lee agrees we could see the national average climb to $6.00.

Biden has taken steps that, looking back, have had a negative impact. The cancellation of the keystone pipeline project in 2021 and the cancellation of offshore drilling leases in the Gulf of Mexico and Alaska, last month have not helped.

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