Think gas is expensive now? Here’s why it could get worse
Why high gas prices could trigger next inflation wave
For Californians, the sting of high gas prices may be a warning sign of broader economic trouble ahead.
ALAMEDA, Calif. - For Californians, the sting of high gas prices may be a warning sign of broader economic trouble ahead.
"There’s nothing I can do. I have to pay it. It is what it is," said Pleasant Hill resident Marco Burciaga while filling up Monday morning.
"It’s disappointing that it’s so expensive because it stops a lot of people from going places and experiencing memories," added commuter Jo Gruszka.
Global tensions driving oil costs
What we know:
Experts say the recent surge in gas prices is tied to tightening global oil supplies.
"The war in Iran has tightened the world oil market because about 20% of all the world’s oil was coming out of the Persian Gulf," said Dr. Severin Borenstein, director of the UC Berkeley Energy Institute at Haas.
Crude oil is a cornerstone of the U.S. economy, and rising costs to secure and transport it are rippling across industries worldwide.
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Ripple effects across industries
Big picture view:
Higher oil prices are expected to drive up costs far beyond the gas pump, affecting everything from travel to food.
"Crude oil and the petroleum products that are being affected by the war go into the manufacturing of pretty much everything," Borenstein said. "We’ll start to see increases in the prices of manufactured goods and also in the delivery of those goods."
Shipping companies are already adjusting prices.
The U.S. Postal Service has implemented a temporary 8% rate adjustment. FedEx has added a 26.5% freight fuel surcharge, subject to weekly changes. UPS has applied fuel surcharges ranging from 20% to 27% on deliveries since January. Amazon plans to introduce a 3.5% fuel and logistics fee for third-party sellers starting April 17.
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Inflation concerns grow
What they're saying:
Economists warn that rising fuel costs could contribute to broader inflation.
"All of these are going to start to raise prices. That starts to show up as inflation," Borenstein said. "And once it shows up as inflation, the Fed gets very worried about that because you can get into an inflationary spiral."
Such a cycle can intensify as workers demand higher wages to keep up with costs, prompting businesses to raise prices further.
Gas hits almost $10 a gallon in this coastal California community
Gas prices have been soaring, leading to a lot of pain at the pump, but a station in a scenic community along California’s coast just might take the cake, with premium gas going for $9.99 a gallon.
What consumers can do
What you can do:
In the short term, experts recommend holding off on purchasing airline tickets if possible and shopping around for gas, as prices can vary significantly even within the same neighborhood.