According to AAA Alabama, the average price of a premium gallon of gas blew past $5 last week in Alabama and now stands at $5.27 on average statewide. As of June 10th, AAA reported the highest recorded average price for a regular gallon of gas at $4.61, a 21 cent increase from the prior week.
We wanted to know, why are gas prices rising and what can we do about it?
That’s why, when the University of Alabama offered local press to interview one of their experts —Dr. James Cochran, associate dean for research in the Culverhouse College of Business—we jumped at the opportunity.
Here is what we learned.
Supply and Demand
Bham Now: Gas prices are skyrocketing. What is happening right now?
Cochran: The simple answer is the disparity between supply and demand of gasoline has increased substantially over the past several months. There are a couple of reasons.
Supply has decreased because producers cut back on production during the pandemic, which also caused gas prices to decline earlier and they haven’t been able to ramp up production quickly.
Supply decreased rapidly after Russia invaded Ukraine.
And our efforts in the United States to transition our economy away from reliance on fossil fuels has resulted in some reluctance by energy companies to expand their oil production capacity.
On the other side, we see demand increase because people always travel more in the summer. After two years of pandemic conditions, people are even more excited about traveling this summer. And so oil demand has rebounded from our pandemic faster than oil production.
Expect Prices to Increase
Bham Now: How high will the prices go?
Cochran: It’s really hard to say how high the national average price of gasoline will go in Alabama. But there are some real limits to how high the price can go.
First, the price might eventually reach a point at which many consumers simply can’t afford to use as much gas as they traditionally use.
At that point, the demand decreases. If the demand decreases sufficiently, the price may stabilize, and then perhaps even drop.
Second – if prices continue to increase some of the oil producing nations might decide to release more of their supply on the market because they see it as being more profitable.
Once they do that, the supply will increase and if it increases sufficiently, the price might stabilize and then even drop.
Recently, gas prices in Alabama tend to run at 90 to 95% of the national average. So as long as the national average is increasing, I think we can expect to see the average price of Alabama increase as well.
What Can You Do? Drive and Fly Less
Bham Now: What can Alabamians do to help lower prices?
Cochran: It’s really difficult to say when the price of gas will start to fall. In the short term, the most effective way for us to bring about a decrease in the price of gas is to use less and decrease the demand.
This means we should drive and fly less regularly. This will naturally happen to some degree at the end of the summer. But it also means we should focus on buying goods that are produced locally whenever possible. This reduces the demand for gasoline resulting from demand for goods that have to be transported.
I think it’s also important for us to think about those that are being hurt most acutely by increases in gasoline prices and the resulting higher prices of goods.
Those who can comfortably afford higher gasoline prices, and the resulting higher prices of goods should also drive and fly less frequently. Why less frequently? Because this will bring down gasoline prices faster.
Help Folks Get Through
On a personal note, Dr. Cochran encourages people, if possible, to donate to local food banks and organizations that help our local neighbors with their day to day needs.
“It is important we help those who are hurt most acutely by increased gas prices,” he concluded.
A good statewide resource that can connect you with local food banks and groups that help with utility bills and housing assistance is United Way’s 2-1-1.
Even though the service is operated by the United Way of Central Alabama – the organization handles all statewide calls too.
The Bama Buzz wants to help you tackle high gas prices. We are giving away a $100 gas card on our Instagram – Visit for details