When Will Gas Prices Go Down – Gas Prices Predictions

When Will Gas Prices Go Down1
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For a variety of reasons, gas prices have fallen.

In the commodity market there’s a common saying that “the cure for high prices is high prices.” The evidence supports that. In other words, low demand reduces price growth because of high prices.

Although some driving is necessary—for example, to get to work—with prices at record highs, consumers might choose not to go on a road trip or to carpool with friends instead of driving alone. Government consumption statistics, which indicate a decline in demand, have shown this to be the case.

Dwindling Global Supply And Increased Demand

As demand has grown, the world’s overall oil supply has had trouble catching up.

The Covid-19 pandemic’s initial lack of demand caused a reduction in supply, which is now being exacerbated by Western sanctions against Russian oil. According to the New York Times, Russia supplied about one in ten barrels of oil to the world market before it invaded Ukraine in February.

In order to make up for the diminished supply, it is now proving difficult for oil-producing companies. Although OPEC and OPEC+ promised to increase production in the summer, production disruptions in Nigeria and Libya caused OPEC’s oil output in June to fall short of expectations.

Oil traded at over $100 per barrel even before news of the missed target broke because analysts had already expressed doubts about the organization’s ability to meet its production goals.

Other production disruptions are also present. A strike by Norwegian oil workers could reduce the country’s output by up to 8%, further impeding the world market.

According to Rystad Energy, an independent research and business analytics firm, the U.S. is selling a record number of barrels to foreign buyers to support the faltering global oil market. On its own, however, it won’t be sufficient to permanently lower gas prices.

Increased Refining Costs

Before crude oil is suitable for use in automobiles, it must be refined. The cost of refining is rising, and this cost is being transferred to consumers.

According to the U.S., the cost of refining now accounts for more than one-fourth (26%) of the price of a regular gallon of gasoline for consumers. Environmental Protection Agency. That number has increased as a result of refineries closing nationwide as a result of natural disasters as well as a drop in demand during the height of Covid. Refineries still operating are having difficulty keeping up.

Weather Threats To Domestic Production

A busy hurricane season is also becoming more likely, which analysts fear could devastate the already vulnerable energy infrastructure. any significant cyclone in the United States Gulf Coast could severely disrupt oil exports and further stress an already depleted supply.

The domestic oil supply has been significantly impacted by natural disasters in the past. Over 95% of the Gulf of Mexico’s oil production facilities were forced to temporarily shut down in 2021 due to Hurricane Ida. The energy supply chain would be severely impacted by another hurricane of that size.

When Will Gas Prices Go Down2

States Sending Stimulus Checks To Help Consumers Manage Rising Prices

In a last-ditch effort to aid consumers, Biden has proposed a three-month federal gas tax holiday, even though there may not be significant relief on the horizon. For the months of July through September, the holiday would suspend the federal gas tax, saving motorists up to 18.4 cents on regular gasoline and up to 24 cents on diesel.

However, there would be little savings. Based on average mileage data from the Federal Highway Administration and average miles per gallon data from the U.S., if the gas tax had started at the start of July, drivers would have saved about $78. Department of Energy.

To help their citizens, some states are intervening in the meantime.

To help taxpayers deal with rising costs, more than a dozen states will be making one-time payments to them in the near future. Colorado, Delaware, Hawaii, and other states are among them. The biggest checks will come from California, were recently passed legislation promises payments to qualified households of up to $1,050.

Several other states are thinking about implementing comparable programs.

For the time being, consumers must deal with the high costs they are paying at the gas pump. Using smartphone apps to locate cheap gas near you, signing up for gas rewards programs, and sensibly making gas purchases with rewards credit cards are all wise ways to save money on gas.

How Low Will Gas Prices Drop?

Because of lower demand and cheaper oil prices, the average price at the pump is the lowest it has been since March 2022. Crude oil fell below $90 a barrel in the first week of August for the first time since Russia invaded Ukraine, and it has stayed below $100 ever since.

We’re only 53 cents per gallon short of the $3.17 average we saw at this time last year, even though we’re a long way from the $2.60 per gallon average we saw in September 2019.

By the end of October, the national average could reach $2.99, according to a GasBuddy report.

We cannot make any assumptions about the price of gas this year, acknowledges Patrick de Haan, head of petroleum analysis at GasBuddy.

In 2022, Why Is Gas So Expensive?

One obvious factor is Russia’s ongoing invasion of Ukraine. The war increased gas prices by more than $1.70 per gallon at their peak, according to the White House. Even though the US doesn’t import a lot of Russian crudes, there is a global market for oil, so any change there has an impact on prices everywhere.

How Can Motorists Reduce Their Fuel Costs?

Despite a decline, gas prices are still higher than usual. Reduce your unnecessary travel, compare prices, and, if it’s easier, travel across state lines.

Gas Guru and similar apps search for the most affordable gas in your area. Others, like FuelLog, track your car’s gas mileage and can help you determine whether it’s getting good fuel economy. Furthermore, a lot of gas station chains offer loyalty programs, and many credit cards offer rewards programs that offer cash back on gas purchases.

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