Professor: Surging gas prices will have long-term effects
[May 02, 2026]
By Jim Talamonti | The Center Square
(The Center Square) – A University of Chicago professor says the effects
of high gas prices will ripple through the economy and change how people
live.
AAA ranked Illinois as the eighth most expensive gas market last week,
with the average price of regular unleaded hitting $4.86 a gallon and
diesel topping $5.60.
The average Illinois price one year earlier was $3.40 for unleaded and
$3.56 for diesel.
Professor Steven Durlauf, director of the Stone Center for Research on
Wealth Inequality and Mobility at the University of Chicago, said higher
gas and oil prices disproportionately affect modest and poorer families
and ripple through the economy.
“When diesel prices go up the way they have, that increases
transportation costs for vegetables and fruits, and that ends up showing
up in the grocery stores as well. One can go across many, many different
commodities in the economy and ask what the consequences are for their
prices,” Durlauf told The Center Square.
Illinois Restaurant Association President and CEO Sam Toia said product
costs for restaurants are up about 33 percent since the pandemic, but
high gas prices might bring the number closer to 38%.
“And what does an independent restaurant owner-operator do? They have to
raise their prices. When they raise their prices, they lose customers.
When they lose customers, they're going to lose a few more pennies and
then they're going to go out of business,” Toia told The Center Square.
Durlauf said higher prices for the production of goods and services also
affect the labor market.
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“You don't see very many people quitting jobs to move elsewhere. New
hiring opportunities seem to be frozen, etc. And all that matters as
well because it's one thing for prices to go up, it's quite another if
somebody loses their job or they're fixed in their job and can't find
better opportunities,” Durlauf said.
Durlauf said higher commuting costs may affect relationships between
employees and employers who want to reduce working from home.
“Firms, of course, have a lot of ability to force people to go to the
office,” Durlauf said.
The surging gas prices may have long-term effects on business and
consumer decisions.
Durlauf said oil price shocks in the 1970’s drove people to consider
fuel economy and gas mileage when they purchased cars.
“I think the 2026 equivalent is going to be, this will increase the
desirability people see for electric vehicles,” Durlauf said.
Even if the Strait of Hormuz opens and gas and oil prices drop quickly,
Durlauf said the events pump uncertainty into the system.
“People are making decisions on electric vehicles that are long run
decisions. If you think that it's likely that this is going to happen
again, that’s an incentive to buy an electric vehicle beyond the
day-to-day prices,” Durlauf said. |
