There’s been reason to smile lately because gas prices have been falling. Why? And will the decline continue? N.C. State University economist Mike Walden responds.
“Well, of course, … in economics … it’s all about supply and demand. So we have to look at supply and demand of gas. On the supply side, gas — really oil, because gas is derived from oil, petroleum — oil supplies are very ample around the world. (There is) lots of oil out there. And then if we look at demand usually in the winter time, especially in the U.S. and in northern Europe, usually in the winter time, driving slows down because the weather’s not as good. People are not going on vacation. So you have a decline in demand but supplies are ample. That really pushes prices down.
“Now we’ve had a special impact from Hurricane Sandy. Hurricane Sandy, of course, essentially knocked out the northeast for at least some days. People weren’t going anywhere because they couldn’t. And so that’s put an extra push downward push on gas prices.
“Now, my prediction: We’re actually going to see a little bit of rebound in gas prices in the near term as the northeast comes back online and people start driving more. But don’t look at that as permanent. Let that run for about a week or two weeks, and then we’ll start to see again a downward trend, the typical downward winter trend in gas prices.”