- We don’t exactly know what’s going to happen with gas prices in the U.S. in the next few weeks or months; nor do experts. But we’ve found out what analysts predict is coming soon.
- Their best guess: slight fluctuations up and down, depending on where you live. And state “gas tax holidays” that should help—but may also hurt.
- The list of factors that go into gas prices is long and growing: the pandemic, supply chains, OPEC’s attitudes, Russia’s invasion of Ukraine and all the consequences from that. The only certainty right now is uncertainty.
Gas prices at the pump are constantly fluctuating. Given the state of our pandemic world, the numbers have been going up and down in what seems like confusing ways. Russia’s invasion of Ukraine a month ago set off the latest round of highs—leading to the highest ever gas prices in the U.S., depending on how you calculate it—but now prices have somewhat stabilized at this high level. Which brings to the next big question: What’s next? We’ll spoil the ending here to say we can’t be sure, but we can look at the various factors influencing the price and let you make your own predictions.
Some states have responded to the recent price spike by introducing gas tax holidays. While this does lower the price at the pump, removing the gas tax—even temporarily—actually works to drive prices up in the long run. GasBuddy’s Patrick De Haan posted on Twitter Monday that states should really be thinking of different approach to helping motorists when it comes to gas prices.
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According to De Haan’s numbers, gas tax holidays are boosting gasoline demand, especially in a place like Maryland, since that’s a place where D.C. residents can easily cross the border to fill up for less money. Maryland dropped its state gas tax (which is 36.1 cents per gallon for gasoline, 36.85 cents per gallon for diesel) on March 18 for a total of 30 days. As De Haan notes, demand for gasoline in the first nine days of the gas tax holiday was up more than 26 percent compared with right before the holiday was put in place. Georgia’s recent gas tax holiday resulted in a rise in demand of 13 percent. Nationally, demand for gasoline has been pushed up 8.7 percent since February, before these states lowered their state gas taxes.
The problem is that reducing consumption is a long-term problem, while politicians often think in shorter-term efforts. AAA said Monday that with the price of a barrel of oil hovering around $110, the national average price for a gallon of gasoline has dropped a bit since the record highs earlier this month. On March 11, the average hit $4.33, but that has come down to $4.24 Tuesday.
“The global oil market reflects the volatility caused by the war in Ukraine grinding onward,” AAA spokesperson Andrew Gross said in a statement. “And with oil prices refusing to fall, the price at the pump is likewise meeting resistance at dropping further.”
Oil prices are steady, in part, because oil a group of producing countries (known collectively as OPEC+) said Monday it is unlikely to increase oil output in the near term. Insiders told Reuters that the major OPEC members are keeping production stable and the OPEC+ group, which includes Russia, “has steered clear of the topic of Ukraine,” Reuters reported.
While demand for gas in the U.S. has increased some in the last month, it is still low by historical standards. AAA cites new data from the Energy Information Administration (EIA) that shows that the overall drop in demand is helping bring prices down. “However, the steady increase in the price of oil is slowing that decline,” AAA writes. “If oil prices continue to rise, pump prices will likely follow suit, reversing course from the current downward trend.”
De Haan is also on board the train that sees mild price fluctuations in the near term.
“We’ll see a mix of slight decreases and some potential increases mixed in,” he said in a statement. “California markets should finally cool off and areas could even move lower in Southern California, while the Great Lakes could see gas prices jump up after having fallen for the last week or so. While the national average should start to stabilize for the time being, there’s no telling what’s around the corner, at least for now, as the volatility in oil prices persists.”
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Source: Motor - aranddriver.com
