AMES, Iowa -- Gas prices are on the rise again, creeping over $2.60 per gallon nationally last week according to official energy statistics from the U.S. government. Consumers have watched prices rise steadily since the start of the year and spike within the last month.
While the current price is about $1.40 less than last year at this time, many Americans have fewer discretionary dollars to spend on driving this summer because of the weak economy. So how high can they expect prices to go?
Iowa State University experts can help gauge where prices are headed and what impact they'll have in many related areas.
Biofuels pricing, production and federal policy
Chad Hart, grain markets specialist and
professor in agricultural economics, (515) 294-9911, chart@iastate.edu
Hart can address all aspects of the economic realities facing
biofuel producers under varying economic conditions. He can
discuss the pricing of biofuels and biofuel feedstocks that may
affect fuel prices at the pump. Hart also has expertise in
biofuel policy on the federal level and what the industry will
look like under the new administration.
John Miranowski, professor of agricultural
economics and environmental and resource economics, director of
the Institute of Science and Society and interim co-director of
Iowa State's Biobased Industry Center, (515) 294- 6132,
jmirski@iastate.edu
Miranowski says at current levels of biofuel production -- at
least over the long run -- petroleum prices essentially
determine the prices of biofuel. For example, gasoline prices
below $2 per gallon in recent months have resulted in lower
ethanol prices, and to some extent lower corn prices (although
there are other factors operating in the corn market). Lower
gasoline and diesel prices have led to lower biofuel prices and
have been responsible for recent low and sometimes negative net
returns for many biofuel firms.
Consumer behavior and family decision-making
Kay Palan, associate dean, associate professor
of marketing, College of Business, (515) 294-9526, kpalan@iastate.edu
Palan studies consumer socialization and family
decision-making. She can discuss how consumers' spending
habits of both budgeted and discretionary income may be
affected by rising energy costs. Palan also will explain how
consumers view gasoline and energy in their family lives and
how they may alter spending habits in light of price hikes. She
teaches undergraduate and graduate classes on consumer behavior
and strategic marketing.
Economics of rising fuel prices on consumer demand
David Frankel, associate professor of
economics, (515) 321-2689 (cell), (515) 294-6263, dfrankel@econ.iastate.edu
Frankel sees rising fuel prices amid economic weakness being a product of steps taken by the Organization of the Petroleum Exporting Countries (OPEC) to restrict output in order to support the oil price. "OPEC's aim is to limit output enough to raise prices, but not so much to prevent economic recovery, since a prolonged recession is bad for their revenue as well," Frankel said. "Gas prices are still quite low versus a year ago, but the economy is still weak as well, so it's not clear whether or not we will be traveling more or less this summer."
Peter
Orazem, University Professor of economics, (515)
294-8656, pfo@iastate.edu
Orazem says the current economy has lowered incomes, and that
may have a bigger impact on driving than gas prices.
"While $4 gas in a recession would affect driving more
than $4 gas in an expansion, we won't get $4 gas unless
demand for it picks up, and that would only be in an
expansion," he said.
Impact of high gas prices on alternative fuel research and development
Robert
C. Brown, Iowa Farm Bureau director of the Bioeconomy
Institute, Anson Marston Distinguished Professor in Engineering
and Gary and Donna Hoover Chair in Mechanical Engineering,
(515) 294-7934, rcbrown@iastate.edu
Brown says high gas prices are good for research and
development of alternative fuels. "Low energy prices slow
the emergence of the bioeconomy, not to mention other
alternative energy developments like wind and solar," he
says. "Investors are more cautious when energy is cheap
and users less interested in alternatives."
Impact of high fuel prices on transport industries
Yoshinori
Suzuki, associate professor of logistics & supply
chain management, College of Business, (515) 294-5577, ysuzuki@iastate.edu
Suzuki studies fuel management among trucking and other
transport industries. He can discuss how the rising gas prices
affect the cost of transporting goods and services and how that
cost will impact prices to consumers. Suzuki recently developed
a model for minimizing the fuel cost of truckload carriers.
Trade policies, commodity markets and biofuels
Bruce
Babcock, professor in agricultural economics, director
of the Center for Agricultural and Rural Development, (515)
294-6785, babcock@iastate.edu
Babcock can discuss agricultural commodity markets, the impact
of biofuel on United States and world agriculture, the
development of risk management strategies for farmers, and the
analysis of agricultural and trade policies.