Despite West Texas intermediate crude oil futures dipping below $100 per barrel on Tuesday, serious gas price relief may be unlikely happen until motorists make adjustments by driving less.
“I think the only thing that’s going to make a dent in gasoline or jet fuel prices is demand destruction,” Vectis Energy Partners principal Tamar Essner said on Yahoo Finance Live after being asked when gas prices may drop below $4 a gallon (video above). “So we have to push higher until we get to that point.”
Consumers are beginning to see some pressure taken off their wallets when making their stop at the local gas pump, with the average price of regular unleaded gasoline dropping for the third straight week last week, but prices remain exorbitant as drivers haven’t pulled back aggressively on travel.
People drive their cars near Exxon and BP gas stations at the exit of the Holland Tunnel during the start of the Memorial Day weekend, under rising gas prices and record inflation, in Newport, New Jersey, U.S., May 27, 2022. REUTERS/Eduardo Munoz
The current average price ofs regular gasoline in the U.S. is $4.77 a gallon, according to Gas Buddy data, down from an all-time high of $5.03 a gallon on June 16. GasBuddy estimates that gas prices dropped more than 10 cents.
“While we may see prices decline into this week, the drop could fade soon if oil prices reverse, especially with strong demand over the holiday,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement. “For the time being, Americans are spending nearly $100 million per day less on gasoline than when prices peaked a few weeks ago, and that’s well-needed relief at a time when gas prices remain near records.”
Motorists are continuing to pay through the roof though to fill up the tank compared to prior periods.
The national average price for regular unleaded gas is up $1.66 a gallon from this point last year, according to AAA data. Diesel prices continue to sit above $5.70 a gallon on average nationwide.
“I think prices have to go quite a bit higher in order to see demand destruction,” Essner added. “What that magical number is I don’t know because we are in unprecedented times in terms of having this build of demand post COVID at the same time because of stimulus and higher disposable income.”