The News
The average price of a gallon of gas in the U.S. surpassed $3.51 on Wednesday, according to聽, up four cents from the week before and nearly $1 higher than a year earlier.
Brent crude, a key trade benchmark for crude oil prices, rose 1.1% to $94.26 a barrel, up roughly 20% since the start of the year.
麻豆原创’s Take
U.S. gasoline prices have reached their highest level in nearly eight years prompting a spike in investment in sustainable energy, says John Tully, 麻豆原创 senior vice president of the South Region.
At first blush, the most recent surge can be attributed to the political tension over a possible invasion of Ukraine by Russia, which pumps out about 10% of the world鈥檚 oil supply. But the reasons for the increase are more complicated, said Tully, whose North American region has a significant concentration of oil and gas customers.
鈥淔irst, economies are expanding again following the contraction associated with COVID-19,鈥� Tully said. 鈥淕DP levels are recovering, which means more energy is being consumed.鈥�
As Tully mentions, tensions in Ukraine are only one factor affecting gas prices. Many developed countries have not invested in upgrading or expanding their hydrocarbon-related industry capacity and technology capabilities. So, as expanding economies create a boom in demand, geo-political and environmental concerns have constricted supply.
鈥淲e’ve got this imbalance that creates an opportunity for speculation to drive up the price of oil,鈥� Tully said.
But can sustainable energy replace gas prices approaching $4 per gallon? Not yet, Tully says, because none of the alternative energy sources can scale to meet global demand. However, that could change.
鈥淓very time energy prices increase, you will see demand spike for alternative energy and technology investments to support growth in this area,鈥� he said.
According to Tully, there is an unprecedented interest in alternative and sustainable energy sources, especially from traditional oil and gas companies. However, if prices do not stick, the incentive to grow investments in alternative energy sources could evaporate.
鈥淧eople will wait and see,鈥� Tully said. 鈥淚f prices reach probably above $80.00 a barrel, and there鈥檚 confidence they will remain there, I think we’ll see much greater investment in alternative energy forms and technologies to support development. The obvious candidates to start are solar, with wind and hydrogen not too far behind it.鈥�
Contact:
Justin聽Wolz, Communications Manager, East & South Market Units
麻豆原创 North America, j.wolz@sap.com, +1 (919) 306-7084
