Gas Prices Fall for 34th Straight Day. Why It Won’t Last.

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Council of Economic Advisors member Jared Bernstein speaks at a press briefing about the fall in retail gas prices.

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Andrew Harnik/AP/Shutterstock

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US average gasoline prices have been dropping steadily for over a month but experts don’t see the trend continuing for long given the peak of hurricane season ahead and the lingering effects of the Ukrainian war on energy prices.

The average cost of a gallon of gas was $4.507 on Monday. That has fallen consecutively for 34 days from $5.014 on June 15, according to data from OPIS, an energy and commodities analytics provider.

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The drop in prices can be attributed to Americans working from home and worsening consumers’ psychology that could be signaling recession. And while these factors may continue to push down prices for a short time, prices could spike up again in the coming weeks because of refinery shutdowns as hurricane season intensifies and the Ukrainian war continues.

“It’s probably a tragedy as opposed to a comedy,” Tom Kloza, global head of energy analysis at OPIS, told Barron’s, He called the second half of the year dynamic and defensive—there are multiple factors that can make prices bounce back up.

Mid-September is the peak of hurricane season. Last year, Hurricane Ida knocked out nearly all of the production in the Gulf of Mexico region and at least nine refineries shut down or reduced production, according to the Energy Information Administration. Normally, refiners can shut down during a hurricane without pushing fuel prices up but this time “we don’t have the safety net of Europe making up” for the lost volume, Kloza said.

The whole of South Africa’s oil-refinery fleet being out of action doesn’t help. Sasol Oil, South African Natref refinery, announced its shut down over the weekend, following the shutdown of other refineries in the area over the past two years.

Anything can happen in the short-term, said Patrick De Haan, head of petroleum analysis at GasBuddy. The US average for product supplied—a proxy for demand—is at 18.7 million barrels a day, its lowest since June 2021, according to the latest weekly data from EIA. De Haan thinks overall gasoline demand is down 5-7% down from the 10-year average, which helped push down prices.

Both De Haan and Kloza agree that absent any unexpected issues, prices will decline in the next week or two but could go up later. Kloza, who lives about 10 miles from the Gulf of Mexico, has a prediction of $5 a gallon for the national average at the end of the hurricane season in November.

Write to Karishma Vanjani at [email protected]


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