Central Michigan University

• CMU economist weighs in on skyrocketing gas prices

Topics in this story: Business, finance, jobs and the economy, College of Business Administration, Economics, News tips and sources

SOURCE:
Philip Thompson, associate professor of economics
Central Michigan University
Phone: 989-774-3608
E-mail: thomp1p@cmich.edu

A recent surge in gas prices has prompted drivers throughout the country to wonder what the cause might be and how long we can expect this to last. CMU economist Philip Thompson says that it has a great deal to do with demand and supply in the oil market, along with the declining dollar in the U.S., and he doesn't see gas prices decreasing in the near future. Thompson is available to speak about this issue.

A few of Thompson's initial thoughts on the subject:

• "A combination of factors on both the demand and supply sides of the oil market, along with the recent loss in the value of the dollar in international currency markets, have caused the recent increase in oil and gasoline prices and will likely keep them in the same range for at least the duration of the summer."
• "On the demand side are the continuing growth of the Chinese and Indian economies and the annual increase in demand as the summer driving season gets under way in the U.S. On the supply side we see that OPEC is producing almost at its capacity, oil production in Russia is flat or declining, and there is continuing uncertainty over supplies from many sources (e.g., Venezuela) because of political factors."
• "Finally, since oil prices are stated in U.S. dollars, the recent decline in the dollar has meant that oil sellers cannot buy as much in the rest of the world with their oil revenues; dollar-denominated prices must therefore rise to compensate for the decrease in the dollar's purchasing power."

Thompson is an authority on energy and regulatory economics. His research has been in the areas of residential energy efficiency, residential demand for natural gas, and oil and gasoline price fluctuations. He also can speak about microeconomics, industrial organization and energy economics.

Philip Thompson


CMU Media Relations contact:
Heather Smith
989-774-1702
heather.smith@cmich.edu