Gas prices hit $3.50, UW experts explain why

For those who commute to the UW every day, the new milestone average of $3.50 per gallon means more money spent at the pump. Experts at the UW offer explanations and alternatives to avoid the prices.

Gas prices reached a record high nation average of $3.50 per gallon April 21, according to the American Automobile Association (AAA), and the cost has been increasing dramatically. Prices were $3.26 a month ago and $2.85 a year ago.

UW economics professors explained the gas price increase as a result of simple economics: high demand and low supply.

“Some people point to the role of speculation in higher oil prices, but many analysts disagree that speculation plays a major role. It is really the economic fundamentals of the oil market that explain much of the rising price of energy,” senior lecturer Haideh Salehi-Esfahani wrote in an e-mail.

As large quickly developing countries grow, their demand for cars and gas increases dramatically.

“In emerging economies such as China and India, demand for energy is increasing, and new sources of energy are harder and harder to find,” Salehi-Esfahani wrote.

Other experts at the UW looked beyond the United States to find increases in automotive use.

“China is becoming the second biggest economy in the world,” senior lecturer Michelle Turnovsky wrote in an e-mail. “Of course, oil is also a very important factor in their booming industrial production, and their need for oil for manufacturing is also huge. Supply, of course, does not increase at the same pace.”

Fossil fuels, nonrenewable sources extracted from the Earth, provide the bulk of energy sources yet also create the most pollution.

As an alternative to fossil fuels, some have turned to renewable sources or bio-fules to power their automobiles.

Renewable sources include hydroelectric, nuclear, wind and solar sources. However, renewable sources only provide a small fraction of energy at this time. Bio-fuels are derived from living material, most commonly plants.

“Bio-fuel is not a solution in my mind because they are very expensive to produce in terms of other energy that has to be used in their production. They are also quite polluting, and they now contribute to the high price of food since they compete for agricultural produces,” Turnovsky wrote.

Turnovsky took an optimistic view on the record high prices.

“This is the signal that we have to change our approach and stop wasting nonrenewable highly polluting sources of energy,” Turnovsky wrote.