Here comes $ 3 gas, just as Americans start traveling again

Here comes $ 3 gas, just as Americans start traveling again

by
The national average price of petrol climbed to the right 47 days to almost $ 2.89 per liter, according to AAA. U.S. drivers have not experienced an average price of $ 3 per liter since 2014, although it came close in 2018 and 2019.

“$ 3 gas will be the norm at Memorial Day,” said Robert Yawger, director of energy futures at Mizuho Securities. “We were trapped inside for a year. People want to get out of the house. ‘

Some states already have $ 3 gas to deal with, including Pennsylvania, Illinois, Arizona, Utah, Nevada and California.

The pain at the pump could cause political problems for the White House. President Joe Biden acted quickly this winter to respond to the climate crisis by curbing the fossil fuel industry.

This has led some critics to try to pin down the “blame” for higher gas prices on Biden – although insiders in the energy industry say the increase is not just about federal policy.

“Make no mistake, prices would have risen no matter who was in the White House,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s more about economic recovery.”

Goldman Sachs: $ 80 Crude Oil Comes This Summer

After being crushed by Covid in 2020, the oil market was one of the biggest winners of the reopening on Wall Street. U.S. crude reached a pandemic high of $ 66.09 a barrel on March 5, an incredible rebound from its April 2020 low of $ 37 a barrel.

OPEC and Russia gave the oil show a turbo boost earlier this month, which shocked the market with the decision to extend their dramatic production cut by at least another month.

Why an oil price 'superbike' is unlikely
The V-shaped recovery in the oil sector did experience problems last week. US crude oil tumbled 6% to $ 61.42 a barrel due to concerns about the rocky rollout of vaccines in Europe.

But Goldman Sachs predicts the oil rally will return as demand accelerates. The investment bank expects Brent crude, the global benchmark, to rise from just $ 65 today to $ 80 by summer.

“We view the recent sell-out as a short-lived downturn in an otherwise large oil price march and a buying opportunity,” Damien Courvalin, Goldman’s head of energy research, wrote in a report to clients last week.

Rising demand, muted supply

De Haan is surprised at how quickly the demand for petrol is returning to the levels last seen just before the pandemic broke out. Based on GasBuddy data on petroleum purchases, US demand during the week ended March 20 was about 1% above the week ended March 14, 2020.

The search for directions in the United States has also exceeded January 2020 levels, according to mobility trends published by Apple. By contrast, similar searches in Germany, the UK and Italy remain well below January 2020 levels.

Wall Street's biggest fear is not Covid. This is inflation

“There’s a bit more cabin fever this spring,” De Haan said. “The overwhelming chance is that at some point we will hit the country average of $ 3.”

In addition to the desire to undertake travel, the energy market is being helped by the subdued US supply. The pandemic inflicted a crushing blow on the U.S. oil boom, while breakers drastically cut production to stay alive.

Although the US crude oil is more than $ 60 per barrel, the country estimates that the country produces only about 10.9 million barrels of oil per day. It has declined by a staggering 2.2 million daily barrels from the same period in 2020.

Of course, this also means that American producers have the ability to pump much more if prices get too high.

The Keystone Pipeline Debate

Tom Kloza, global head of energy analysis at the Oil Price Information Service, does not think the national average will reach $ 3 per liter this year due to high unemployment, long-distance work and less travel to major sporting and entertainment events.

Regardless, higher gas prices will feed the narrative that Biden’s energy policy will put American consumers in the bag. During the campaign, Biden repeatedly had to deny his opponent’s claims that he would ban hydraulic fracturing.
To save the planet, Tide wants you to stop using hot water for laundry
But Biden moved quickly to cope with the climate crisis. On his first day in office, he withdrew the Keystone XL pipeline, placed a temporary moratorium on oil and gas leasing in the Arctic and rejoined the Paris Agreement on Climate Change.
At the end of January, Biden also instituted a 60-day suspension of new oil and gas leasing and drilling permits on federal lands, unless approved by Home Office leaders. The policy applies critically only to new leases and permits, not to existing ones. To the dismay of climate activists, the Department of Home Affairs said earlier this month that the 60-day suspension would not be renewed.

Yet energy analysts deny the idea that Biden’s tough stance on fossil fuels, at least so far, is raising gasoline prices.

“There is some blame on Biden and the Keystone Pipeline, but it has absolutely nothing to do with the price of crude oil or petrol,” Kloza said.

$ 4 gas could accelerate EV surge

If Biden does act to severely curb US production, it could, of course, lead to higher oil prices.

The prices are probably not yet at the level where it would be in demand by having drivers cancel. And it is not clear what point of excitement will give the excitement about the reopening after the pandemic.

“$ 3 gas is not going to scare anyone away,” said De Haan. “People are not going to hold back this summer. They are finally starting to feel better.”

A bigger picture, the oil industry does not want to see prices rise too high because it will only accelerate the shift to electric vehicles.

“You do not want to go there,” Mizuho’s Yawger said. “You will kill the golden goose.”

.Source