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lite.cnn.com - on gopher - inofficial | |
ARTICLE VIEW: | |
Good news: The worst could be over for gas prices this spring | |
By Matt Egan, CNN | |
Updated: | |
9:30 AM EDT, Tue April 30, 2024 | |
Source: CNN | |
Israel and Iran have been in open conflict. Ukrainian drones have | |
repeatedly attacked Russian oil refineries. And OPEC continues to hold | |
back oil supply. | |
All of these alarming developments that would hurt the US economy and | |
worsen inflation. | |
Yet that has not happened, at least not yet. US gas prices have stopped | |
rising and even briefly dipped in recent days. | |
The national average stood at $3.66 a gallon on Monday, down from $3.68 | |
a week ago, . | |
Now, there is growing hope that gas prices are at or near a peak for | |
the spring – or perhaps even for the year. | |
Patrick De Haan, head of petroleum analysis at GasBuddy, is predicting | |
drivers will get relief at the pump in the coming weeks. | |
“I’m hoping the worst is behind us,” De Haan told CNN. “Unless | |
there is something drastic that happens, there are increasing odds the | |
national average has hit the projected spring peak.” | |
Tom Kloza, global head of energy analysis at the Oil Price Information | |
Service, also expects gas prices to dip in the coming weeks. | |
“Most of the worries for the first half of the year are over. I think | |
we’re in the clear until hurricane season,” said Kloza. | |
‘Could have been much worse’ | |
Of course, none of this is to say gas prices are cheap. They were as | |
well as in the spring of 2020 when Covid-19 kept many Americans off the | |
roads. | |
Still, a springtime peak below $3.70 a gallon would be a win for | |
consumers given the real risk of significantly higher prices at the | |
pump. | |
“It could have been much worse,” said Andy Lipow, president of | |
consulting firm Lipow Oil Associates. | |
Drivers in just seven US states are paying $4 a gallon or more for gas, | |
according to AAA. All of those states are in the Western half of the | |
country, led by California, where the state , up from $4.88 a year ago. | |
The national average is nowhere near the unprecedented spike above $5 a | |
gallon in June 2022. | |
“It’s clear to me this is not going to be a record-setting year. It | |
will feel much more normal to fill your tank this year,” said De | |
Haan. | |
Economic, political consequences | |
Officials in Washington would also likely be breathing a sigh of | |
relief. | |
Rising gas prices earlier this year have contributed to that have cast | |
doubt on when the Federal Reserve will be able to lower interest rates. | |
A spike in gas prices would be the last thing President Joe Biden needs | |
as he struggles to convince voters of his economic message before | |
November. Biden’s approval rating for the and it’s even lower | |
(29%) for inflation, according to a new CNN poll. | |
Underscoring concerns in the White House about gas prices, earlier this | |
month the Biden administration backed off concerns to buy crude oil for | |
the US Strategic Petroleum Reserve, the emergency oil stockpile. | |
Some analysts expect gas prices to still go a bit higher. | |
Lipow said he thinks the national average will peak at $3.75 a gallon | |
this year. | |
Still, that would be below the peak of $3.88 a gallon last year – a | |
peak that didn’t occur until September. | |
“I’m not looking for a spike in gas prices,” Lipow said. | |
Why gas prices have cooled | |
There are multiple reasons why gas prices have stopped rising for the | |
moment. | |
First, oil prices have stopped spiking. US crude nearly hit $88 a | |
barrel on April 12 as investors braced for against Israel for a | |
suspected strike on an Iranian diplomatic complex in Syria. | |
But oil prices tumbled after that retaliation was largely blocked by | |
Israel and its partners. Fears of a wider conflict in the Middle East | |
have eased for now, although that could of course change with little | |
notice. US crude dipped below $83 a barrel on Monday. | |
There are also seasonal factors at play. | |
The switch to more expensive summer-grade gasoline at US refineries is | |
now over. Likewise, gasoline supply has been helped by the return of | |
refineries that were sidelined for routine maintenance. | |
The supply of oil continues to be boosted by record-shattering US crude | |
production. All of that US oil, led by the Permian Basin of West Texas | |
and New Mexico, is offsetting production cuts by OPEC+, the producer | |
group led by Saudi Arabia and Russia. | |
Meanwhile, demand for gasoline has been relatively subdued despite | |
other signs that American consumers are spending aggressively. | |
Hurricane season looms | |
There is a risk of a double peak in gas prices. That’s what happened | |
last year as gas prices hit a top in April, cooled off and then | |
rebounded late in the summer as extreme heat sidelined US refineries. | |
“Weather can wreak havoc,” said Kloza, the OPIS analyst. | |
Perhaps the bigger risk is a severe hurricane that disrupts oil | |
refineries in the US Gulf Coast. | |
Forecasters are warning it could be a very busy hurricane season (which | |
traditionally ), with the Colorado State University before. | |
“Hurricane season is the next major hurdle,” said Kloza. | |
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