With gas prices giving folks sticker shock, what will it do to Whatcom’s economy?
While Whatcom County residents are suffering from sticker shock as they pump gasoline, local economists are weighing what impact the price increase will have on the overall local economy.
The average price for a gallon of gas in Whatcom County hit $4.61, according to AAA Washington. That smashed the previous high of $4.50 a gallon, set in June 2008. The $4.50 in 2008 for a gallon of gas was more painful for consumers then, however: Adjusting for inflation, that price would be around $5.88 in 2022, according to an inflation price calculator.
Given that residents are regularly reminded about the price of gas with the signs around town and not, say, the price for a gallon of milk, the sudden jump will weigh heavy on the psyche.
“For some, gas at $4-4.50 a gallon doesn’t result in any change in behavior. For some, it does,” Hart Hodges, co-director at Western Washington University’s Center for Economic and Business Research, wrote in an email to The Bellingham Herald.
That could lead to less travel and less spending on nonessential items such as entertainment or restaurants. Or maybe not: Residents had already cut back on entertainment and dining out because of the pandemic. Last year’s stimulus money may also be keeping checking accounts elevated, Hodges said.
“Travel and entertainment are starting to recover, but at the moment there is a bit of (money) to soften the impact of high gas prices,” Hodges said.
The high gas prices could actually provide a boost to the local economy, particularly in the border communities. While a gallon of gas here is looking pricey for Whatcom residents, it’s a deal for Canadians who see much higher prices in British Columbia. CTV News in Vancouver reported that more Canadians are making a trip to Point Roberts to fill up, saving up to $40 a trip.
The big question is how long does gas stay above $4 a gallon? Given the global volatility, that’s a difficult question to answer and it could play a role in how long and how much people cut back on extra expenses. Gas prices rose quickly after Russia invaded Ukraine about two weeks ago, even though Russian oil is not a huge factor in the U.S. economy.
While Russian oil is not a huge factor in the U.S., it is a big deal in the global markets. That volatility will continue to felt around the world.
“We’ve never been in this situation before, with this level of uncertainty,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. “As we lose a major global producer under the weight of deserving bipartisan sanctions for invading a sovereign country, the cost is high. Americans will be feeling the pain of the rise in prices for quite some time, with little good news foreseen.”
In more typical years, spring is usually the time when gas prices rise and peak. After Memorial Day weekend, prices usually start to come down in Whatcom County. In a video blog post on Tuesday, March 8, DeHaan said he expects prices to continue to inch up this spring and is concerned that in places like California, the price could hit $6 a gallon.
