SOUTHFIELD, Mich. (WXYZ) – Michigan is a leader in the nation when it comes to skyrocketing gas prices. The AAA reports that we saw an increase of approximately 30 cents last week. That is the biggest increase in the nation.
Fuel suppliers tell 7 Action News that part of the increase is due to the fact that subway and Detroit gas stations have to switch to more expensive summer fuel this month. The change results in an increase in costs.
The Michigan Petroleum Association says for gas stations, the average price is about $ 4.40 a gallon for ordinary unleaded. At some stations they sell at a loss. This could mean that, since gas stations average their costs and set prices, your price could rise in the coming days if trends continue.
“I love my car so much, but it’s like, do I love it enough to keep paying these prices?” said Andrew Thomas, a driver from Detroit.
Many drivers are considering downsizing, if not already. While higher gas prices are bad for drivers and local gas stations, there are winners.
“Oil companies are currently making record profits. Because I can “, said Dr. sc. Janell Townsend, Head of Business Marketing, University of Oakland.
This week, Shell posted record quarterly earnings of $ 9.1 billion, an increase from $ 6.4 billion in the fourth quarter of 2021. BP’s earnings in the first quarter were $ 6.2 billion, up from $ 4.1 billion. dollars in the previous quarter.
Drivers want to know why oil companies can’t charge less if they make that much money.
“I think we should feel some of the pain, put ourselves in our shoes once and for all,” Thomas said.
“Well, there’s a supply and demand factor,” Professor Townsend said.
Townsend says we are at a time of year when people drive more. The Energy Information Administration says gasoline inventories here in the U.S. fell 2.2 million barrels while demand rose 8.74 million.
“The price of oil is a global price. They don’t set the price, “said Dr. Zeina Alsalman, a professor of economics at the University of Oakland.
Professor Alsalman says U.S. oil companies have doubled production since 2008 and now benefit. She also says speculators expect prices to rise and as a result agents are now buying overhead stocks for later, affecting prices now.
“Whenever we say that there is a shortage of oil production, that is not the main reason for the increase in the price of oil. These are precautionary measures against deficiency. So when they start buying more as a precaution against a shortage of oil production, that’s what increases the price of oil, along with higher global demand, ”said Professor Alsalman.
These precautions may occur in response to the European Union’s proposal to ban Russian oil imports within six months.