The year 2020 brought a pandemic, then came inflation. The year 2022 brought a war to the Ukraine, then came higher crude oil prices. As a result of this series of unfortunate events, we find ourselves in a time where we see prices skyrocketing across the board. Now, Arkansas economist Michael Pakko talks about the rise on everyone's mind: gas prices.
"When it comes to gasoline, there's no other commodity quite like it," Pakko told the Hot Springs National Park Rotary Club on Wednesday. "It fluctuates in price on a daily basis. Everywhere you go there are big signs on the street corner that tells you what today's price is.
"So in one sense I think people spend an inordinate amount of attention monitoring gas prices just because it's right in front of our face all the time. But at the same time it's also a very important part of most families' budgets."
And not only is gasoline a large part of these budgets, but the fact that just about any good requires some kind of transportation, the rise in gas prices causes the price of multiple things to increase, therefore affecting other areas of a budget.
But despite all of this, while gasoline prices fluctuate, gasoline consumption doesn't really change.
"When prices go up you still have to spend some of your income going to work, and the grocery store and taking the kids to soccer practice and all of that, so it serves and kind of a tax on the household budget," Pakko said.
However, Arkansans can rejoice to some extent because compared to the national average as of Monday, gas prices in the state were $3.93 compared to $4.33 in the US. But they are on the rise. Pakko said the current numbers are up about 13-14 cents from a week ago, and about 21 cents from a month ago. And when looking at the AAA Gas Report Wednesday morning, they rose another 6 cents in a matter of just two days. So the latest reading on Arkansas is at $3.99.
To look a little closer, there is also variation in gas prices seen across the state, with Hot Springs at 5 cents lower than the state average.
With the war in Ukraine prompting the most recent rise in crude oil prices hitting over $105 a barrel, Pakko says we will continue to see high gasoline prices. His "optimistic expectation" is that the state will see prices settle in around $3.80-$3.85, meaning Hot Springs will settle in around $3.75-$3.80.
"Some of the uncertainty with Ukraine is going to go a long way in continued high oil prices," he said. "A lot of the outlook really depends on uncontrollable factors halfway around the world.
"So any forecast is as good as the forecaster who can understand all those complexities, and perhaps I'm not the one, but I've consulted the experts here and the consensus seems to be we're going to be stuck with high gas prices throughout the rest of the summer."
Pakko says there is some prospect of relief in prices during the summer if things settle down with the Ukraine, but there is very little hope we will see significant reductions prior to the fall.