Petroleum Expert Explains Why Gas Prices Continue to DROP
It’s been a pleasant surprise to see gas prices begin to drop in the last two weeks, and KGVO reached out to Patrick DeHaan at Gas Buddy to find out the reasons why prices are going down.
DeHaan provided some inside background on the recent fallback.
“Gas prices in Montana are down from about $4.93 a week ago and today we're at about $4.88,” began DeHaan. “Now you'll notice that prices are still relatively high in much of the Rocky Mountains. That still has to do with the refinery fire at Exxon Mobil's refinery in Billings back in March. But the good news is that refineries are back online and supplies which had been plummeting as a result of that outage are starting to improve and that is going to push gas prices down for potentially the next week or two, maybe even longer, should the price of oil remain where it is today. We're down about $1 a barrel to about $104.”
At one point President Biden proposed a federal ‘gas tax holiday’, but DeHaan said that has nothing to do with the reduction in gas prices.
“Keep in mind what you're paying at the pump today has nothing to do with Biden's request for the federal gas tax holiday which has not been implemented,” he said. “That's still something that could change. But for now, the decrease at the pumps really is just a function of falling gas and oil prices as we see more concerns in the oil market of a possible economic slowdown. And that economic slowdown could bring along with it a slowdown in oil demand.”
DeHaan said gas supply and demand is a relative matter when it comes to how it affects consumers.
“Gasoline demand is a little bit weaker than where we normally are for this time of year,” he said. “It's down about five to seven percent compared to normal, also down by about seven to ten percent compared to record levels, however, we're still consuming some 380 million gallons of gasoline every day. So gasoline demand still is stronger than where it was during the pandemic, maybe not quite as strong as last year, but given the fact that we've lost refining capacity because of COVID, there's very little margin for error. That's part of the reason why prices have gone up so much. That and of course, Russia’s war in Ukraine is keeping oil markets very tight at a time of recovery in demand.”
DeHaan said consumers seem to be willing to foot the bill for expensive gas just to enjoy the summer.
“A lot of people have a lot of exuberance to hit the road in the summer months and we're seeing that represented in very high gasoline demand,” he said. “That's part of the reason why prices have been so high. So, you know, when you talk about prices at the pump this summer, keep in mind, while prices have come down, we're not out of the woods yet. Prices could go right back up if we see a major disruption like a hurricane or refinery outage. This is not over yet. And we could continue to see prices go up if we do see any of those major issues come to light.”
DeHaan encouraged consumers to seek ways to save on the cost of gas, such as specialized credit cards, limiting trips, and carpooling.