Gas prices inch down as outlook appears stable
Three dollars a gallon has long been the price to watch at the pump. And we’re nearly there. The average price of gas today is about $3.07 a gallon, according to AAA. Where will it go from here?
It’s pretty common to start the year with a lower number at the gas pump, says Devin Gladden at AAA.
“The early part of the year is typically where you see the floor for prices for the year,” he said.
That’s because the weather’s colder, the days are shorter and people are dealing with their holiday spending hangovers. What’s unique this time around is that U.S. oil production has been hitting highs, which means:
“Generally we’re expecting prices to be lower than they were last year,” Gladden said.
Prices in the South are already below $3 a gallon and could keep going down, says Tom Kloza, global head of energy analysis at Oil Price Information Service.
“There’s going to be a lot of cocktail party talk about, well I was able to buy for $2.19 or $2.29 or $2.40. Some places, we’re going to see price points of $1.99,” he said.
Not the most exciting small talk, but it’s better than complaining about the weather.
Bob McNally, president of Rapidan Energy Group, says a lot of what happens with oil prices starts not on the ground — where crude is — but somewhere a bit more intellectual: in traders’ minds.
“Prices and what traders will pay and expect for the prices depend a lot on perceptions of how the world is working,” he said.
McNally says traders have largely shrugged off the Israel-Hamas war. But an expansion of the war could threaten that.
“If there were to be a material supply interruption, oil prices would spike,” he said.
Other events that could lead to price volatility are increasingly extreme weather patterns that could disrupt supply chains, and more disagreements among OPEC+ members that could affect supply.
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