Economist weighs in on future of gas prices

Economist weighs in on future of gas prices

Posted:
The good news for Tennessee drivers is they are still paying some of the lowest prices in the country. The good news for Tennessee drivers is they are still paying some of the lowest prices in the country.
"The main reason why Tennessee has lower gas prices than other parts of the country is you have lower taxes," said John Felmy, Chief Economist at the American Petroleum Institute. "The main reason why Tennessee has lower gas prices than other parts of the country is you have lower taxes," said John Felmy, Chief Economist at the American Petroleum Institute.

By DREW GARDNER
6 News Reporter

KNOXVILLE (WATE) - After dipping briefly below $3 a gallon, gas prices are once again on the rise with conflicting predictions for the future.

The good news for Tennessee drivers is they are still paying some of the lowest prices in the country.

"The main reason why Tennessee has lower gas prices than other parts of the country is you have lower taxes," said John Felmy, Chief Economist at the American Petroleum Institute. "Tennessee's prices about $3.12 for regular and the national average is about $3.26, and that's about the difference in gasoline taxes."

Felmy was in town speaking to the Rotary Club about energy and the cost of fuel. He says the key driving factor in the roller coaster of gas prices is crude oil.

"We're producing more oil right now and that's led to a drop in the trade deficit for oil," said Felmy. "We're spending $40 billion less on oil imported than we did last year, and that means a lot in terms of spending money and jobs here in the U.S."

Our oil production is only one of many factors including one big one.

"China, China, China," said Felmy. "We are having record demand for world crude oil. So even though we're producing more, particularly here in the U.S., supplies still remain tight and that's why we still see $100 per barrel crude oil."

He says that number could go down if production here in the U.S. went up.

"Between what we can produce in this country, imports from Canada and bio-fuels, we can become 100 percent self-sufficient from a North American basis, and that means jobs, energy security and a wonderful improvement in the economy," said Felmy.

Before that can happen, Felmy says Washington needs to come up with policies that will allow this to happen in a way that will be good for the economy, which is something he hasn't seen in his forty years of experience.

"I remain hopeful that Washington will make the right decisions and move forward, and we can produce those things," said Felmy.

Just how soon remains to be seen.

You can always find the lowest gas prices in our area using our Gas Tracker.

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