Economist says enjoy gas prices now, but prepare for uncertainty

Economist says enjoy gas prices now, but prepare for uncertainty


MYRTLE BEACH, SC (WMBF) - Economic experts say consumers should brace themselves for some possible price changes at the gas pump.

For the past 15 years, we've seen gas prices go from just over $1 average to $4 per gallon, showing consumers you really can't rely on the prices. Robert Salvino, Economics professor at Coastal Carolina University, said we shouldn't rely on the gas prices to fuel big purchases.

"The 15-year history of going up and down - the more recent history would point to being a little bit cautiously optimistic," Salvino said.

AAA expects gas prices to remain below $3 a gallon this year, other former oil executives saying gas prices could rise up to $5 a gallon in the coming years; but Salvino thinks oil producers don't have incentive right now to take action that would lead to increase costs.

"They [oil production companies] do not have incentive to cut back production, because they are making money at these prices, and they are going to make money at even lower prices, so as long as they are selling and making profit they have no incentive to cut production," explained Salvino.

Recent talks about the future of the Keystone Pipeline could impact how much we pay for a gallon of gas. "As far as the supply side, it could have a positive effect on pushing gas prices down even more, because it would allow supply to come to market," Salvino said.

In January, car dealerships in the Grand Strand have seen a surge of customers, those who were once not attracted to bigger SUV's and trucks because of gas prices are now reconsidering, but Salvino suggest it may not be the best idea to buy based on gas prices alone.

"The question would be what is the biggest part of owning a vehicle? Is it the gasoline, or is it the price of the vehicle...the insurance?" he said. Finding the answer to the question may require simple math to help calculate your actual pump savings.

"They say people average about 12,000 to 15,000 [car mileage] a year, and if you take the miles per gallon that your car gets - say okay, what did I actually spend when it was at that price, and what do I spend now, divide that over the months and there's your difference," Salvino said.

AAA said the bottom line is prices could start to go up because there will be more demand. Tracie Lawrence, AAA Branch Manager, said they can not predict how low prices will go or how long they will last. "We think people should enjoy it while they can because typically gas prices go up around the summer time," Lawrence said.

Salvino says if they do rise, the savings consumers are seeing now can help off set it. "You can put away and be prepared for when it goes back up then you're not going to be shocked by it," he said.

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