Soaring gas prices impacting Southeast Texas: Q and A with LU economics instructor Dr. Agim Kukeli
March 16, 2022 | by Shelbe Rodriguez
Consumers across the nation are feeling the pain at the pumps as gas prices rise to an all-time high. While Beaumont locals reluctantly fill up their gas tanks, Dr. Agim Kukeli, an instructor of economics in the LU College of Business, chimed in to shed light on the cause for the rise in gasoline and when, if at all, consumers can expect to see a decrease. 
Q: Amidst the war in Ukraine, on March 8, President Biden issued a U.S. ban on imports of Russian oil, liquefied natural gas and coal. Does this have an impact on the rise in gas prices?
A: So, this is a difficult question, but I have to be honest and I'll share my opinion as well as what others think. There is a lot of discussion going on among the economists around the country as to what has stirred up inflation. Prices of goods and services have gone up. According to the latest numbers we have, prices have gone up to 7.9%, a little bit close to 8% and that's 40 years high. The only time that we had that kind of inflation was in 1982. This does [impact] our consumers as well as the Federal Reserve which, mandated by Congress, is in charge of keeping prices stable. Gas prices were going up before the war in Ukraine broke and if we look at the prices in February that were released by Bureau of Labor Statistics, consumer prices also were up like 7.5%. If we look at the crude oil prices on the market, the highest crude oil price I think hit just the day before President Biden put a ban on Russian oil in March. Because of this, I think that the economy is overheated.
Q: Being that Texas is the largest oil-producing capital in the world, how do our gas prices in Southeast Texas compare to those across the U.S.? Are our prices lower since we are closer to oil refineries?
A: Unfortunately, it doesn't work like that. So, the price of oil is set globally. The price of crude oil was $123 a barrel and now it's $95 –– it changes by the minute, but it goes around that number, then it depends how much of that decrease is going to be seen at the gas pumps.
Q: Have gas prices and rising inflation had a direct impact on consumer spending habits?
A: There is an economic growth, but it's not a growth that we normally would see which is why I was a little bit hesitant to stress that the economy is overheated. We had a slowdown during the pandemic and we all know that the unemployment is almost historically low. So, what that means is that once the pandemic sort of fades away as it looks, and I hope that's the case, we’re going to replace supply chain blockages –– the buzzword that we have been using –– and we’ll start seeing service industry issues.
Now, if the pandemic fades away, then people are going to require more services than they used to during these past three years. As a result, there will be an increase in the demand for services, then to match that demand, businesses are going to be needing more workers. For majority of families, it's an erosion of purchasing power –– they feel as if they have less money than they used to have because they [can’t purchase as many goods]. They feel it at the gas pumps, they feel it that the grocery stores and it's felt everywhere.
Q: When it comes to inflation and gas prices at the pump, what can consumers expect down the road?
A: Economists are good at talking and telling the story, but when it comes to predictions, we’re just as bad as everybody else. So, if inflation returns to the Federal Reserve goal, which is roughly 2% and considered healthy inflation, from the economic point of view that means that the prices stay where they are today. My sense is that we are going to live with inflation for a little bit. It will linger for a while … maybe even a few months. We can't tell for sure because it all depends upon how fast and accurate the Federal Reserve intervenes to cool off the economy.
Q: As gas prices at the pump continue to rise, what can consumers do in the meantime?
A: Cut down a little bit on the trips and try to carpool. I'm talking to students right now –– take a bike when you can, try using Uber or Lyft with a group. It’s also sustainability. Maybe we'll be blessed with lower gas prices as we get into the summer where people will be traveling more, enjoying outside and having fun with their families.
Q: Amidst the war in Ukraine, on March 8, President Biden issued a U.S. ban on imports of Russian oil, liquefied natural gas and coal. Does this have an impact on the rise in gas prices?
A: So, this is a difficult question, but I have to be honest and I'll share my opinion as well as what others think. There is a lot of discussion going on among the economists around the country as to what has stirred up inflation. Prices of goods and services have gone up. According to the latest numbers we have, prices have gone up to 7.9%, a little bit close to 8% and that's 40 years high. The only time that we had that kind of inflation was in 1982. This does [impact] our consumers as well as the Federal Reserve which, mandated by Congress, is in charge of keeping prices stable. Gas prices were going up before the war in Ukraine broke and if we look at the prices in February that were released by Bureau of Labor Statistics, consumer prices also were up like 7.5%. If we look at the crude oil prices on the market, the highest crude oil price I think hit just the day before President Biden put a ban on Russian oil in March. Because of this, I think that the economy is overheated.
Q: Being that Texas is the largest oil-producing capital in the world, how do our gas prices in Southeast Texas compare to those across the U.S.? Are our prices lower since we are closer to oil refineries?
A: Unfortunately, it doesn't work like that. So, the price of oil is set globally. The price of crude oil was $123 a barrel and now it's $95 –– it changes by the minute, but it goes around that number, then it depends how much of that decrease is going to be seen at the gas pumps.
Q: Have gas prices and rising inflation had a direct impact on consumer spending habits?
A: There is an economic growth, but it's not a growth that we normally would see which is why I was a little bit hesitant to stress that the economy is overheated. We had a slowdown during the pandemic and we all know that the unemployment is almost historically low. So, what that means is that once the pandemic sort of fades away as it looks, and I hope that's the case, we’re going to replace supply chain blockages –– the buzzword that we have been using –– and we’ll start seeing service industry issues.
Now, if the pandemic fades away, then people are going to require more services than they used to during these past three years. As a result, there will be an increase in the demand for services, then to match that demand, businesses are going to be needing more workers. For majority of families, it's an erosion of purchasing power –– they feel as if they have less money than they used to have because they [can’t purchase as many goods]. They feel it at the gas pumps, they feel it that the grocery stores and it's felt everywhere.
Q: When it comes to inflation and gas prices at the pump, what can consumers expect down the road?
A: Economists are good at talking and telling the story, but when it comes to predictions, we’re just as bad as everybody else. So, if inflation returns to the Federal Reserve goal, which is roughly 2% and considered healthy inflation, from the economic point of view that means that the prices stay where they are today. My sense is that we are going to live with inflation for a little bit. It will linger for a while … maybe even a few months. We can't tell for sure because it all depends upon how fast and accurate the Federal Reserve intervenes to cool off the economy.
Q: As gas prices at the pump continue to rise, what can consumers do in the meantime?
A: Cut down a little bit on the trips and try to carpool. I'm talking to students right now –– take a bike when you can, try using Uber or Lyft with a group. It’s also sustainability. Maybe we'll be blessed with lower gas prices as we get into the summer where people will be traveling more, enjoying outside and having fun with their families.
Dr. Agim Kukeli recently sat down with 12News reporter Cameron Sibert to discuss soaring gas prices in the United States. According to Kukeli, gas prices will continue to rise wreaking havoc on the economy.