Welcome back to Cheddar is closing bell.
Everyone prices at the pump this year reaching a seven
year high and a new forecast from gasbuddy predicting gas
prices will only continue to rise in 2022 and that
the national average could even reach $4 a gallon.
Well analyst at Gasbuddy say anything could happen when
it comes to gas prices in the future.
As the pandemic has made it difficult to make predictions
about where the economy is heading.
So here now to discuss is the federal
policy advisor for the Consumer Energy Alliance,
Michael's there.
Michael, thanks so much for coming on the show.
I know this new forecast from Gasbuddy
predicting prices are going to peak
At a monthly average of $3.79 in May. They could even reach $4
as that
line up with your own predictions.
Unfortunately it does.
And uh, has a lot of motorists know right now, this is just uh,
this is really causing some challenges for families right now
and those that are going home to visit with relatives.
It's uh, this is very possible.
And under the current scenarios that we're seeing um, I I think it's,
it's actually likely.
I know anecdotally,
I've spoken to people who have had to delay
retirement because gas prices have been through the roof and
there are, there are essential workers,
they still have to show up to work during these challenging times.
Michael,
I am just curious what's behind this is that the coronavirus is its stimulus.
What do you attribute these rising gas prices too
well with, with gas prices, there's lots of blame.
And there are a lot,
there are a lot of folks in in the political sphere
that that want to pin that blame one place or another.
But really it's it's a function of supply and demand and
what you had and what you have ongoing right now,
our efforts to to limit development both domestically and internationally
internationally.
It's with Opec and the cartel trying to
limit supplies to drive up prices domestically.
Or there are some policy choices that are being made to limit limit to uh,
supplies as well.
And so that's what we're seeing right now.
The pandemic really impacted folks in terms of just
the overall, just the shutdown of economies globally,
which resulted in catastrophic harm to a lot of the oil and gas industry.
As you saw demand completely shut down in the U. S.
We saw the largest single year decline in production that they have on record.
Um, so it really had a huge impact.
And then when demand starts coming back up and
the supplies don't keep keep up with that,
then you see that increases like what we're seeing now.
It's interesting, I think 2021 this year,
the year of the electric vehicle investment, collectively,
we've seen tens of billions of dollars pledged by all
of the biggest automakers out there to commit to E.
V. S.
For the first time really in their histories.
And the study actually released this month by IPs
is claiming rising gas prices is now finally boosting interest
in electric vehicles with that interest tripling since 2018
gas prices continue to rise.
Michael, do you think that makes it even more attractive?
Oh, absolutely.
I think every time that you see gas prices going
this high people are looking for options and quite frankly,
a lot of the announcements that you referenced there from GM ford,
even Toyota building a battery manufacturing facility in north north Carolina.
I mean
if you're going to see greater demand, but what you have right now is
It represents about 1.8% of current sales.
Um, so you could see massive increases in, in sales of these, these vehicles.
Um,
yet still the majority of the fleets that are
out there would still be internal combustion engines for,
for quite some time.
So those, those costs that we were just talking about,
um, impacting essential workers, A lot of folks that are,
that are sort of the working poor and,
and some of those folks that are in that situation,
they have to travel further for their jobs
using older vehicles which have worse gas mileage.
So when you have high gas prices,
they're rarely the first people that are going to be able to adopt TVs yet.
They're the first people that are going to feel the crunch
one thing that we haven't spoken about yet.
Michael is winter weather, extreme winter weather,
cold winter weather and the impact that, that could have on gas prices.
How should consumers be preparing for those prices
to fluctuate if we do get winter storms.
Yeah, I think one of the big areas that, that we've seen are some,
some of the impacts on some of the refineries, um,
that have resulted in some of the prices going going higher.
But in terms of, of homeowners and,
and folks that are heating their homes this winter.
Um, I think if you have this, these, these storms coming through,
like what we've seen, you could see prices go considerably higher,
particularly as natural gas supply constraints persist
in certain parts of the country.
We came into this winter with sort of historic low supplies.
And so the fact that we've had a slightly warmer winter so far has spared, um,
consumers from, from the really high costs that we predicted.
However natural gas prices are already double what they were a year ago.
And so they're going to feel some of
that through your electricity bills this winter already.
That was gonna be my next question.
I hope we have a quick moment to address that because I know heating your home
is going to be expensive as you mentioned, Michael this year
because of higher prices. Yes. If these winter storms persist,
what could we see the cost ballooned to?
Are we talking a double digit increase in the
cost simply to heat your home this winter?
I think that will,
that will be affected regionally by the supplies and
and by the different dynamics in those areas.
In terms of what your your fuel mix is and what the availability of the fuel supply is.
So there are certain parts of the country that,
that are probably going to feel this more than others.
The Northeast is one area in particular where you've
had early shutdowns of coal plants and natural and,
and nuclear plants making the area more reliant on natural gas at the same time.
Um,
the ability to build those new necessary
generator units have been blocked and the ability
to build the pipelines necessary to feed those have also run into some challenges.
So in places like the Northeast,
you could see some real some very severe challenges.
And there's an area that that historically has, you know, some,
some rough weather in the winter anyway.
So I think that regionally you're gonna see some differences,
but you could see prices significantly higher this year.
Okay. We'll be watching closely.
Michael's their federal policy advisor for the Consumer Energy Alliance.
We appreciate your time. Thank you