KANSAS CITY, MO — If you are planning to take a trip or even spending a day at a lake, gas prices will impact your summer travel as experts say we can expect those costs to continue to go up.
“It’s at a record high level now and it’s going to continue to go up through the summer,” Larry Wigger, a supply chain economist with the University of Missouri Kansas City, said.
Wigger explained some of the factors driving gas prices to rise.
“Coming into Memorial Day, anticipating that heightened consumer demand and people traveling on vacation, etc.," Wigger said. "Then the oil companies and the retail gas companies price in additional consumer demand. Because we had driven prices way up due to the cost being up due to the constriction supply of oil coming out of Europe, you know, there wasn’t a lot more to go to immediately.”
Wigger explains that although gas prices did not drastically increase over the holiday weekend — it’s coming.
“As prices go up, and they have gone up, we are in record territory, we should expect those costs to be passed on,” Wigger said.
Wigger also weighed in on what impact people's travel plans could have on inflation and rising gas prices.
“We need to assume that unless consumers really decide that it is too expensive and they start canceling vacation plans, we should expect that summer travel will contribute to continuing inflation and fuel,” he said.
However, Wigger says those fuel costs could drop if travelers decide to stay home.
“Once consumers decides that it’s too expensive, and they just start canceling their travel plans, then it's going to be a reduction in demand and so it might freeze or slow any further price increases,” he said.
Wigger added that he understand travelers will more than likely go ahead with their plans, despite rising fuel costs.
“How likely do you think it is that somebody is going to cancel their vacation plans, and decide to sit at home because the fuel in the car is getting too expensive? Or because there is a fuel surge charge on that airplane ticket?" Wigger said. "I think that the smart move right now is that people are going to follow through with those plans they have, and so that consumer demand will continue to drive up price increases."
Lastly, Wigger says consumers could see other indirect costs rise as airlines and banks work to keep up with demand.
“The Federal Reserve Banks moves on interest rates, well that will start to have an effect," Wigger said. "They are raising the cost to borrowing money and eventually that will impact credit card rates if you’re charging at the gas pump or buying a plane ticket on you’re credit card.
As that happens, businesses will also incur more costs and may also raise their prices.
"They will make business decisions more expensive. Business that need to borrow money when they need to provide good and services, whether it’s selling gasoline or airplane tickets, or whatever, it’s going to cost them more to do business," he said.
—
