Record gas prices are forcing Colorado residents to re-evaluate their summer commute and travel plans

Why are prices going up

Fuel prices began to rise in mid-March, when the Russian invasion of Ukraine caused panic in global oil markets.

Shortage concerns caused by the conflict pushed the cost per barrel to about $120 — the highest amount in nearly a decade. Crude oil prices are the largest contributor to regular gas prices, according to the Energy Information Administration.

Meanwhile, travel demand has rebounded from its lowest levels, and the recovery has outpaced attempts by oil producers to increase supply.

The Colorado Department of Transportation and Denver International Airport reported close pre-pandemic passenger numbers on roads and planes during the recent Memorial Day holiday, signaling the start of a busy summer.

“Americans can once again travel more freely than they have in the past two years, and they’re kind of taking advantage of that,” said Skylar McKinley, a spokesperson for AAA Colorado. “Now they have to make other economic choices such as eating less food to be able to travel.”

McKinley said the imbalance between fuel supply and demand has created a worst-case scenario for budget-conscious drivers.

“We’re talking about money that’s noticeable now to most people,” McKinley said. “What remains is to what extent higher prices will soften demand to the point where prices stabilize or even fall.”

Some observers have also pointed the finger at oil companies for artificially inflating prices to please investors, even as crude oil prices fluctuate. Democratic Representative Diana Diggett and other members of the House Energy and Commerce Committee questioned oil executives during a controversial hearing on the issue in April.

Executives denied wrongdoing and blamed market forces for the bulk of the increases.

“I want to be absolutely clear: We do not control the market price of crude oil or natural gas, nor of refined products such as gasoline and diesel fuel,” said Michael Wirth, CEO of Chevron, during the hearing.

“We do not tolerate price gouging,” he said.

Kevin J. Petty / Denveret
The RTD train stops at Southmoor station between I-25 and Southmoor Park. February 19, 2022.

Some look to public transportation and other transportation options

With prices starting to soar this spring, Camila Cloete began researching alternatives to commuting through Denver by car every day.

I initially tried to go out of her way to fill up cheaper stations like Costco, but this trip took an extra 20 minutes, burning the necessary fuel and time. She now tries to catch the RTD train to her job at Meow Wolf in the city’s Sunnyside neighborhood at least three times a week.

“It’s very comfortable,” she said. “But if I’m working the closing shift, I still have to drive because the train doesn’t run late enough.”

Denver-area public transit has seen a slight increase in ridership over recent months, but it’s still below pre-pandemic levels. Metro area residents made 4.8 million trips by bus or train in March — a 42 percent jump over the same time in 2021, according to RTD’s latest cycling numbers.

It’s difficult to directly link higher passenger numbers to higher gas prices, said Kristina Zazueta, director of community engagement at the agency.

“There are so many factors that influence the number of passengers that it is difficult to get to a direct relationship,” Zazueta said. It’s more complicated than gas prices. Factors that influence seasonal response include weather, service levels and the opening of new lines, for example.”

She added that it was possible that there was a relationship. When gas prices rose in 2008, the number of passengers also saw a jump.

“But it wasn’t as dramatic as one might expect,” she said. “The idea of ​​a tight interdependence between gas prices and passengers fizzled out in 2014, when gas prices fell, but ridership has stayed roughly the same.”

Sales of electric vehicles and plug-in hybrids in Colorado are steadily increasing, indicating that buyers have a stronger appetite for electric vehicles.

These types of cars made up 8.6 percent of new car registrations in the first quarter of 2022 — up from 5.6 percent a year earlier, according to the Colorado Automobile Dealers Association.

However, new electric cars are still too expensive for many buyers. Supply in the new car market also remains tight due to chip shortages and delivery delays.

Clouet said she’s considered looking at electric vehicle options, but her budget won’t allow for that this year, she said.

“I am not in a financial position to buy a new car,” she said. “And if I had the disposable income, I wanted to do a lot of research first, so I’m kind of stuck.”

Matt Bloom / CPR News
A sign advertises regular, unleaded fuel for $4.99 at a gas station in downtown Denver, Monday, June 6, 2022.

Is relief on the horizon?

The short answer is probably “no,” given the high demand for travel.

McKinley said prices in Colorado usually rise around Memorial Day and then rise gradually over Labor Day.

“The prices we’re paying now are pretty much the summer floor,” he said. “Now is a great time to start thinking strategically about how to save if you’re worried, knowing that there are ups and downs of prices ahead of us yet.”

He noted that it was still too early to tell how things could go up. Factors such as the busy hurricane season in the Gulf of Mexico could upset oil markets and push prices higher even faster.

“It could affect refining and how we transport gas across the country,” McKinley said. “It’s kind of a scary open question right now.”

This rise has not had a significant impact on consumer spending in Colorado so far. Retail sales remained relatively flat despite higher gas prices.

Personal savings is another story. After saving record sums of money during the pandemic, many workers are beginning to fall back on their monthly contributions to their scam banks. The amount of money the average American saved each month fell to 4.4 percent of his income in April, according to the Bureau of Economic Analysis.

That’s down from a high of 8.7 percent last December.

“This seems to be where people are really hit hard right now,” said Brian Lewandowski, an economist at CU Boulder Leeds School of Business.

Juan Carrillo, a beverage delivery driver who lives in Wheat Ridge, said he likes to beat the tank of his F-150 truck when it’s half or ¾ full.

One afternoon, the strategy kept his bill at a palatable $23. He said he’s not sure if it saves him money in the long run, but it keeps him sane and lets him eat out once or twice a week.

“There are times when I drive a lot and feel like I’m spending $60 a day just to survive,” he said.

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