The State We’re In - Pain at the Pump

From Granite State News Collaborative and NH PBS: The State We’re In - Pain at the Pump

Watch podcast

The price of gas affects so many things beyond our ability to fill our tanks, from the cost of food to your next vacation. Gas prices have dropped a few cents a gallon in the last week. Will it continue? Or will there be more pain at the pump? Discussing the price of gas with The State We’re In host Melanie Plenda are Business NH Magazine Editor Matt Mowry and AAA of Northern New England spokesman Pat Moody.

Read the Q&A

GSNC/NHPBS: The State We’re In program

Pain at the Pump

This content has been edited for length and clarity. Watch the full interview on NH PBS's The State We’re In.

Melanie Plenda: Pat, please give us some background. Gas prices rose steadily as the world reopened during the pandemic, but what led to those increases and how did we get here? 

Pat Moody: Gas prices have been rising steadily. At the beginning of 2021, we started to work through the pandemic. People got a little bit more comfortable getting back to work and traveling, so that increased the demand on fuel. When it comes to fuel, supply and demand is a major factor. In 2022 in New Hampshire, we're paying a statewide average today of about $4.19 for self-serve regular unleaded gasoline. That's about half a cent less than yesterday, and it's about five cents less than a week ago, but it has jumped up about seventy cents in the past month. Primarily that massive bump we've seen at the pump is a result of the supply and demand in terms of crude oil, and the crisis going on between Russia and Ukraine. 

Melanie Plenda: Did any of the supply chain issues impact that at all, or is that separate? 

Pat Moody: Supply chain is definitely a component this time of year. We're starting into the maintenance season, so refineries are starting to go into maintenance and are switching over to the summer blend fuel, which is a more expensive fuel. Typically, we get into Memorial day and plateau out through the summer, then we start to see prices drop. Geopolitical issues, logistics and refinery issues, and weather related concerns can definitely play into prices throughout the year. 

Melanie Plenda: Matt, what impact has the rising fuel had on local businesses and people? 

Matt Mowry: Small businesses have already survived two years of pandemic closures and slow openings, then they were hit with supply chain issues. Now they're dealing with inflation and high gas prices that are going to increase the prices of doing business. We're seeing it in the increasing cost of transport goods; businesses are having to consider passing along that cost to their customers. We're seeing businesses considering surcharges and trying to balance out whether or not that's going to turn customers off. They're also worried about the fact that people are going to have less discretionary spending. If these high gas prices persist, that means we may be seeing people cutting back on their shopping and going out to eat. These are all major issues for businesses.

Melanie Plenda: You touched on this a little bit, but do you expect people to change their spending habits due to the high prices of gas?

Matt Mowry: Depending on how long this goes, I think we will see people forced to change some of their spending habits. People may not make some of those purchases that are not necessary. They may decide to eat in more and eat out less, for example. One of the concerns is if this persists into the summer season, it could have an impact on our tourism industry. 

Melanie Plenda: Pat, why do prices vary so much between the states? As bad as it is here in New Hampshire, it's much worse in California, for example, when it comes to the cost of gas?

Pat Moody: California right now is at $5.88 a gallon. Crude oil is the biggest component in terms of gas prices., and the others are any type of special reformulation that they need to do and any gas taxes that are associated with the state, and marketing and transportation of the fuel. That's why you have such a difference in gas prices across the country. If anybody wants to see what all those gas prices are right now, AAA has the most up-to-date gas price information available. We use credit card swipes from the previous night's close. If you Google AAA gas prices, you'll see our gas price website, and you can dial it into your own specific state and see the trends and how things have changed over time. 

Melanie Plenda: Two gas stations that could be literally across the street from each other can have varying gas prices, and I often wonder if that’s for the same reason as the varying gas prices between states. Is that the case, or is there some other reason for that?

Pat Moody: About 15% of the price of a gallon of gas is related to transportation and marketing costs, the overhead cost for that specific facility, and where they're getting their fuel from. Our most recent survey to our AAA found that at $4/gallon, about 60% of folks said that they would change either  their driving habits, driving styles, or their lifestyles and where they're spending their money. We know that Americans are spending roughly about 51 minutes a day in their cars and traveling on average about 32 miles a day. That's something that's built into their daily, weekly, or monthly budget. Other areas of their lives are likely going to take a hit, and they'll have to start cutting back. 

Melanie Plenda: What could be done about prices at the national or international level? 

Pat Moody: One of the really important things that people need to understand is when we start to hear a lot of decisions at the state and federal level about having a gas tax holiday, that means just suspending the gas tax for a couple months or maybe for the rest of the year. What that ends up doing is eroding the funds that are meant to maintain our roads, bridges, and our transportation systems. At the federal level, I've seen a couple of reports of potentially having some type of relief, not related to the gas tax, but instead having something similar to what they did for families in the United States when it came to COVID relief that we saw in the last couple of years. They’re trying not to impact our highway funds because the safety of our roadways is also extremely important. 

Melanie Plenda: Matt, if these prices persist, what impact do you see that having on the New Hampshire economy? 

Matt Mowry: We're gonna see a strain on small businesses and rising prices. It's really going to impact consumers down the road here, and it's going to affect some small businesses in terms of being able to keep the doors open, depending on how much they're having to pay out due to these rising costs. 

These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.