Apr 192011
Authors: Vashti Batjargal

Over the last month, gas prices have risen more than 24 cents in Fort Collins, compared to the national rise of 28 cents, according to fortcollinsgasprices.com.

In response to the rising prices, students are increasingly working around the high prices, which is the case for Andrew Kauffman, a sophomore economics major.

“I walk and longboard to campus a lot,” said Kauffman, who lives in Rams Village, to avoid spending $35 to fill up his tank.

Gas prices are controlled by two factors: supply and demand, according to Sriram Villupuram, assistant professor in the College of Business’s Finance and Real Estate Department.

“Supply shocks are coming about because of fighting in Libya and in the other oil supplying nations,” Villupuram said. “We’re in a situation where you’re having supply uncertainties in the face of rising demand.”

Low unemployment aided in the high gas prices in 2008. Now, with high unemployment rates, high gas prices threaten to decrease the Gross
Domestic Product, which could increase unemployment to even higher levels and “make the economic situation worse,” according to Villupuram.

“The problem, also, is that for every $10 increase in oil prices (per barrel) it cuts down GDP by .2 to .3 percent,” Villupuram said.

“If consumers are not going to buy with high employment then (countries are) not going to produce,” he said.

When asked if gas prices will reach over $4 a gallon this summer, Villupuram said “It’s anybody’s guess.”

When national gas prices reached their all time high of $4.11 in 2008 gas prices were at $3.50 in April of the same year.

National levels are at $3.81 today, and with several weeks until the U.S. reaches its’ yearly high in gas prices, anticipation is high that gas prices could pass $4 a gallon.

But this is not an unusual price to pay in other countries for one liter of gas.

“Most countries pay three to four times what we pay per gallon, and that’s just the way it is,” said Holly Stein, senior research scientist and scholar in theGeosciences Department. “They’re paying the real value of it and our government subsidizes the cost of gas.”

Stein suggests that there are two approaches to the issue of high prices.

The first: “Drill, baby, drill.”

“It’s a tactic that would be equivalent to spending your retirement before you’re retired,” Stein said.

The second approach is to reduce or eliminate government subsidization.

“When prices increase people will have to reduce,” Stein said. “There will have to be a reduction in our use, which means you drive less or a very fuel-efficient car and mass transport.”

Staff writer Vashti Batjargal can be reached at news@collegian.com.

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