Experts say the recent drop in gas prices is likely to be temporary, as the seasonal trend that began in the summer is largely over.
While crude oil prices rose slightly to $91.56 per barrel on August 19, gasoline prices fell again, with the national average dropping to $3.89 per gallon.
According to TheStreet, $3.49 per gallon is the norm, as reported by Patrick De Haan, head of petroleum analysis at GasBuddy, a Boston provider of retail fuel pricing information. Presently, the median price of a gallon of gas is $3.72, with the cheapest 10% of stations selling it for an average of $3.22. There is a $4.996 per gallon price tag on diesel.
Even though rising energy, housing, and food prices have eaten away at consumers’ purchasing power, consumers have been given a reprieve from higher gasoline prices over the past two months.
“Today, Americans will spend $430 million less on gas than we did in mid-June,” he predicted.
Gas price drops are unlikely to last more than a few weeks, so motorists shouldn’t plan on them.
De Haan speculated that the current decline was “the last inning or so.” There is a lot of economic data that could push us in one direction or another, but for now it looks like we’ll stabilize just under $4 per gallon.
Since price drops have been less severe on the West Coast than in the South and Midwest, he said those areas might see additional reductions.
When Gasoline Demand Peaked, It Ended
According to De Haan, gasoline demand has dropped off its peak. Gasoline sales have dropped every day this week except Thursday, when they were flat compared to the previous week.
Since reaching a high of $5.03 on June 14, gasoline prices have fallen. Consistent with the fall and volatility in crude oil prices, they have dropped by more than a dollar per gallon.
In the wake of Russia’s invasion of Ukraine in late February, crude oil prices plummeted on August 4. Brent crude, the international standard, fell to $95 a barrel while West Texas Intermediate hit $88.
News of slower economic growth in China dragged WTI oil prices down earlier this week, adding to the volatility that has plagued the commodity.
Data on the economy, such as lower inflation, may boost consumer confidence, leading to higher demand for gasoline.
“Additionally, positive economic data may bring optimism and result in an increase in demand,” De Haan said.
Fall is a time when gas prices tend to drop.
Fall is typically the cheapest time of year to fill up your tank because demand falls, people drive less, and winter gasoline is less expensive to produce.
After reaching their high point in the summer, gas prices have begun to fall, and refineries are now producing winter-grade gasoline. Richard Joswick, head of global oil analytics at S&P Global Commodity Insights, told TheStreet that the products used to blend crude oil make these formulations simpler to produce at a lower cost. In his opinion, Brent crude prices “will land below $100 before the end of the year.”
Midway through September, according to De Haan, refineries begin producing cheaper winter gasoline.
As the temperature drops, “demand cools off” and “motorists have less draw to get outdoors,” he explained.
De Haan claims there is no “conspiracy” linking gas prices to upcoming midterm or presidential elections.
Prices may be affected by the hurricane season.
Production and refining capabilities may be impacted by the upcoming hurricane season, which typically begins at the end of August and lasts until the following June.
If a major hurricane were to approach the area, it “could disrupt oil production in the Gulf and refiners in the region,” as De Haan put it.
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Rob Thummel, senior portfolio manager at Tortoise in Overland Park, Kansas, told TheStreet that if a major hurricane made landfall along the Gulf Coast, oil prices could rise by $10, causing gasoline prices to rise by $0.25 per gallon.
He speculated that if refineries went down, the price of gasoline would rise to the mid-$4s.
18 named storms, 8 hurricanes, and 4 major hurricanes of Category 3 or higher are forecast by Colorado State University, indicating an active hurricane season.
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