NORFOLK, Va. — Many of us may think about the impact the price of gas can have on our wallet at the pump, but gas prices can have a much bigger impact.
Gas prices can affect the entire economy.
Go to any gas pump, and you’ll probably get mixed reactions from drivers about the price of gas.
“Right now, I’m paying $2.89 a gallon, so considering what it has been I’d say it’s a pretty good price right now," driver Jack Baker said as he filled up his gas tank.
“I think they’re trending high. They’ve come down a little bit since the new administration came into office, but it’s higher than it was under the previous administration," driver Stephen Fisher said while getting gas.
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According to GasBuddy.com, as of November 27 the average price of a gallon of regular gas in Virginia was $3.11. That’s almost 18 cents lower than a month ago and 23.5 cents lower than a year ago.
Christopher Newport University Assistant Economics Professor, Dr. Rik Chakraborti, said gas prices can drive up the price of things like airplane tickets and groceries.
"Gas is used for so many kinds of transport," Chakraborti said. "When we're thinking about visiting someone over Christmas break and we're thinking about taking an airplane, higher gas prices will show up as higher airline ticket prices. When companies are shipping around stuff for Christmas or to stock up your groceries, they have to use gas so their fleets become more expensive. So, your groceries also show certain changes."
He also said, however, people tend not to pay much attention to changes in gas prices, though, as long as the price is below $4.
“Formally, gasoline demand is what we call inelastic, meaning consumers tend to be less sensitive to pricing for that," Chakraborti explained. "Four dollars is like this magic marker. Any time gas prices go up above $4 a gallon, we start noticing. We start saying ‘Okay, could we carpool, could we use public transportation.’ Things like that."
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Still, the prices can have an impact on how people view the economy.
“When they’re up, seems like pretty much everything is going up. So yeah, I kind of use that as a gauge," Baker said.
“I see the economy as being reflective of the gas prices, but it’s also just one metric," said Fisher.
Chakraborti wouldn't do that, though.
“If you were to ask me whether I would use gas prices as a barometer for the economy, I would use it as a barometer for what’s going on with demands and supply but I wouldn’t use it as any sort of metric to judge whether the economy is doing well or not," said Chakraborti.
