Essay Sample on Higher Gas Prices

Houston; The known city as the world's energy capital and home to numerous energy headquarters; has now struck gas prices to an average of $4 a gallon. This has been the highest price since 2008 and according to researchers, it seems “unlikely sky-high prices will even out soon” (BISNOW). These high prices of gas have impacted Houston’s economy, either positively or negatively, or both. Prices of gas always seem to be directly correlated to economic infrastructure, whether its effects are major or minor the city of Houston proves this relation through jobs, real estate investors, and citizens.

Higher gas prices theoretically lead to a crisis in the economy in any state, but that does not happen with Houston’s economy. Higher gas prices lead to profit for oil companies and an economic boost. With those high profits, oil gas companies will lead to large numbers of new hires and experts believe that the spike in high prices will not decrease any time soon, leading to a long-term employment impact on the U.S. energy industry, and the Oil and Gas industry. “The spike in the price of oil is at its sweet spot for oil company profits” (Campbell Faulkner.) Prices are high enough to turn a profit, but not so high that it impacts demand. Multiple factors contributed to the spike in oil prices; as with all commodities, the balance between supply and demand is a key to the movement of prices, and supply and demand can be driven by a lack of oil supply during an increase in demand for fuel; news cycles, any impact that happens in the world or the country can affect oil prices; and politics, when there is an increase in oil prices we learn about the climate of politics. Other factors affect the price of oil but those are the key factors that move supply and demand. 

The unemployment rate during the years and as we can see during this peak of oil price the unemployment rate has decreased. A finance professor and faculty director at the Gutierrez Energy Management Institute at the C.T Bauer College of Business at the University of Houston pointed out that shale companies will have profit after suffering financially and even various went bankrupt during the devastation of the 2020 oil downturn and the pandemic. Kumar said “That’s how Houston’s oil engine starts to go… More companies are applying for bank loans, so the Houston commercial banking sector will get an uplift. You have these chain effects, more money going to bank employees, more money to the economy.” (Lane Gillespie, Bisnow Houston.) Not every sector stands to benefit. Upstream operations that is the exploration and production of oil and gas; there could be either risk or profit. In areas where downstream operators convert oil and gas to something useful there is a greater danger because their profits and returns are not totally negatively related to the price of oil meaning that the higher the price of oil, the less profitable they are going to be.