LAFAYETTE, LA (KADN) - The price of oil is decreasing and many think this means the price of gas will drop
Oil prices slumped after being hit by a surge in the dollar after President Joe Biden said his administration was looking for ways to reduce energy costs amid a broader surge in inflation.
Tyler Gray, Former president of the Louisiana mid-continent oil and gas association says "When it comes to the state budget and things like that they determine how much state revenue the state will get but as the prices increase it's based on a percentage so it's not a flat fee it's more like a sales tax so Louisiana gets 12 in a half percent so as oil goes up Louisiana's revenue goes up".
Gasoline prices have climbed in recent weeks and many are asking for the Biden administration to tap into the nation's strategic petroleum reserve. Tyler Gray, Former president of the Louisiana mid-continent oil and gas association says it'll be a while before we see a decrease in gas prices.
Tyler Gray, Former president of the Louisiana mid-continent oil and gas association says "Gasoline has a more inelastic demand which means it takes long er to get to that point where people will keep buying the product regardless of what the price of oil is so they just don't move it as quick so it's more a longer price equilibrium it wouldn't be hey it went up two dollars today or two percent, therefore, gasoline will be down by two percent tomorrow it takes a little longer to have that impact."
The strategic petroleum reserve holds the largest emergency supply in the world. it is capable of satisfying the nation's consumption needs for about a month in the event that all imports and domestic production were halted. Gray believes these prices will be determined on whether or not we can catch up with the supply and demand.
He says "And so whether or not we will catch up with that supply and demand will determine the prices whether or not we produce enough oil in the Gulf of Mexico."
The current average of regular gas is $3.14 compared to $1.84 last year.